**Exhibit10.89**

 

 

 

**ASSETPURCHASE AGREEMENT**

 

**by and between**

 

**UTSTARCOM, INC.**

 

**and**

 

**3COM CORPORATION**

 

**Dated as of March 4,2003**

 

 

 

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**TABLE OF CONTENTS**

 
| ARTICLE I TRANSFER OF ASSETS AND LIABILITIES                |
|-------------------------------------------------------------|
|                                                        |   |
| Section  1.1                                                | Assets  to be Sold; Assumption of Liabilities |
| Section 1.2                                                 | Purchase Price |
| Section  1.3                                                | Closing |
| Section 1.4                                                 | Deliveries by Seller |
| Section 1.5                                                 | Deliveries by Buyer |
| Section 1.6                                                 | Post-Closing  Arrangements |
| Section  1.7                                                | Post-Closing  Purchase Price Adjustment |
|                                                        |   |
| ARTICLE II RELATED MATTERS                                  |
|                                                        |   |
| Section  2.1                                                | Books and  Records of Seller Group |
| Section 2.2                                                 | Mail and Check  Handling |
| Section 2.3                                                 | Employees  and Employee Benefits |
|                                                        |   |
| ARTICLE III REPRESENTATIONS AND WARRANTIES  OF SELLER GROUP |
|                                                        |   |
| Section 3.1                                                 | Organization |
| Section 3.2                                                 | Authorization |
| Section  3.3                                                | Consents  and Approvals; No Violations |
| Section 3.4                                                 | Financial Statements |
| Section  3.5                                                | Absence  of Undisclosed Liabilities |
| Section 3.6                                                 | Absence of  Certain Changes |
| Section 3.7                                                 | Intellectual Property |
| Section 3.8                                                 | Title, Ownership and Related Matters |
| Section 3.9                                                 | Subsidiaries |
| Section 3.10                                                | Litigation;  Product Liability |
| Section  3.11                                               | Compliance  with Applicable Law |
| Section  3.12                                               | Certain  Contracts and Arrangements |
| Section  3.13                                               | Taxes |
| Section  3.14                                               | Employee  Benefit Plans; ERISA; Employees |
| Section 3.15                                                | Environmental  Matters |
| Section 3.16                                                | Insurance |
| Section 3.17                                                | Labor Matters |
| Section 3.18                                                | Suppliers |
| Section 3.19                                                | Customers |
| Section  3.20                                               | Assets  and Permits Necessary to the Business; Equipment |
| Section 3.21                                                | Transactions  with Affiliates |
| Section 3.22                                                | Certain Fees |
|                                                        |   |
| ARTICLE IV REPRESENTATIONS AND WARRANTIES OF  BUYER         |
|                                                        |   |
| Section 4.1                                                 | Organization |
| Section 4.2                                                 | Authorization |
| Section  4.3                                                | Consents  and Approvals; No Violations |
| Section 4.4                                                 | Certain Fees |
| Section  4.5                                                | Funding |
|                                                        |   |
| ARTICLE V COVENANTS                                         |
|                                                        |   |
| Section 5.1                                                 | Conduct of the  Business |
| Section 5.2                                                 | Access to Information |

 

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| Section 5.3                                                | Consents and  Approvals                                           |
|------------------------------------------------------------|-------------------------------------------------------------------|
| Section 5.4                                                | Reasonable Efforts                                                |
| Section 5.5                                                | Public Announcements                                              |
| Section 5.6                                                | Covenant to  Satisfy Conditions                                   |
| Section 5.7                                                | Supplemental  Disclosure                                          |
| Section  5.8                                               | Transfers  Not Effected as of Closing                             |
| Section  5.9                                               | Employment  of Eligible Employees                                 |
| Section  5.10                                              | Prohibition  on Solicitation and Hiring                           |
| Section 5.11                                               | No Negotiation                                                    |
| Section 5.12                                               | Confidentiality                                                   |
| Section  5.13                                              | Agreements  Related to Certain Business Real Property             |
| Section 5.14                                               | Insurance Claims                                                  |
| Section 5.15                                               | Tax Matters                                                       |
| Section 5.16                                               | Further Actions                                                   |
| Section  5.17                                              | Compliance  with Bulk Sales Laws; Payment of Retained Liabilities |
| Section 5.18                                               | Standards  Organizations                                          |
| Section 5.19                                               | Compilers, etc.                                                   |
| Section 5.20                                               | Buyer Acknowledgment                                              |
| Section  5.21                                              | Conduct  Relating to Receivable and Payables                      |
| Section 5.22                                               | Non-U.S. Agreements                                               |
| Section  5.23                                              | Agreements  Related to Certain Warranty and Service Obligations   |
| Section  5.24                                              | Assistance  Relating to Retained Agreements                       |
| Section  5.25                                              | Agreements  Related to Certain Liabilities                        |
|                                                       |                                                              |
| ARTICLE VI CONDITIONS TO OBLIGATIONS OF THE  PARTIES       |
|                                                       |                                                              |
| Section  6.1                                               | Conditions  to Each Party’s Obligations                      |
| Section  6.2                                               | Conditions  to Obligations of Seller Group                        |
| Section  6.3                                               | Conditions  to Obligations of Buyer                               |
|                                                       |                                                              |
| ARTICLE VII SURVIVAL OF REPRESENTATIONS;  INDEMNIFICATIONS |
|                                                       |                                                              |
| Section 7.1                                                | Survival of  Representations                                      |
| Section  7.2                                               | Seller  Group’s Agreement to Indemnify                       |
| Section 7.3                                                | Buyer’s  Agreement to Indemnify                              |
| Section 7.4                                                | Third Party  Indemnification                                      |
| Section 7.5                                                | Sole Remedy                                                       |
|                                                       |                                                              |
| ARTICLE VIII TERMINATION, AMENDMENT AND  WAIVER            |
|                                                       |                                                              |
| Section 8.1                                                | Termination of  Agreement                                         |
| Section  8.2                                               | Procedure  for and Effect of Termination                          |
| Section 8.3                                                | Amendment, Extension and Waiver                                   |
| Section 8.4                                                | Termination Fee                                                   |
|                                                       |                                                              |
| ARTICLE IX MISCELLANEOUS                                   |
|                                                       |                                                              |
| Section 9.1                                                | Fees and Expenses                                                 |
| Section 9.2                                                | Further  Assurances; Guarantee                                    |
| Section  9.3                                               | Notices                                                           |
| Section 9.4                                                | Severability                                                      |
| Section 9.5                                                | Binding Effect;  Assignment                                       |

 

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| Section 9.6  | No Third Party  Beneficiaries                                               |
|--------------|-----------------------------------------------------------------------------|
| Section 9.7  | Interpretation                                                              |
| Section  9.8 | Jurisdiction  and Consent to Service; Expenses Related to Legal Proceedings |
| Section 9.9  | Entire Agreement                                                            |
| Section 9.10 | Descriptive Headings                                                        |
| Section 9.11 | Governing Law                                                               |
| Section 9.12 | Counterparts                                                                |
| Section 9.13 | Specific Performance                                                        |

 

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**EXHIBITS**:

 
| Exhibit A  |   | Reference Balance Sheet  (see Schedule 3.4(i)) |
|------------|--------|------------------------------------------------|
| Exhibit B  |   | Bill of Sale                                   |
| Exhibit  C |   | Form  of Assignment of Patent Rights           |
| Exhibit  D |   | Form  of Assignment of Copyrights              |
| Exhibit  E |   | Form  of Assignment of Trademarks              |
| Exhibit  F |   | Instrument  of Assumption                      |
| Exhibit G  |   | Rolling Meadows Lease Agreement                |
| Exhibit  H |   | Multiple  Site License Agreement               |
| Exhibit  I |   | Consulting  Services Agreement                 |
| Exhibit  J |   | Intellectual  Property License Agreement       |
| Exhibit  K |   | Form  of Lease Assignment Agreement            |

 

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**ASSET PURCHASE AGREEMENT**

** **

This ASSET PURCHASE AGREEMENT, dated as ofMarch 4, 2003 (the “**Agreement**”), is by and between UTStarcom, Inc., a Delaware corporation, andits designated subsidiaries or affiliates (“**Buyer**”), and 3ComCorporation, a Delaware corporation (“**Seller”**).

 

WHEREAS, Seller by itself and through the entities setforth on Schedule 3.9 of the Disclosure Schedules (collectively, the “**Seller Group**”) is currently engaged indeveloping, manufacturing, having manufactured, selling, marketing, supportingand providing professional services with respect to the Products (as defined inSection 3.7(n)(iv)) (the “**Business**”); and

 

WHEREAS, Buyer desires to purchase and assume fromSeller, and Seller desires to, or desires to cause other members of the SellerGroup to, sell, assign, transfer, convey and deliver to Buyer, certainspecified assets and properties of the Seller Group related to the Businesstogether with certain specified obligations and liabilities relating thereto,all in the manner and subject to the terms and conditions set forth herein;

 

NOW, THEREFORE, in consideration of the foregoing andthe respective representations, warranties, covenants, agreements andconditions hereinafter set forth, and intending to be legally bound hereby, theparties hereto agree as follows:

 

# **ARTICLE I**

# ** **

# **TRANSFEROF ASSETS AND LIABILITIES**

# ** **

## ***Section1.1***                                   Assetsto be Sold; Assumption of Liabilities

## *** ***

### (a)                                  Subjectto the terms and conditions of this Agreement, at the Closing (as defined inSection 1.3), Seller Group will sell, convey, assign, transfer anddeliver, or will cause to be sold, conveyed, assigned, transferred anddelivered, to Buyer, and Buyer agrees to purchase and acquire, or will cause tobe purchased and acquired, from Seller Group, free and clear of any Liens (asdefined in Section 3.8(a)), except for Permitted Encumbrances (as definedin Section 3.8(a)), all of Seller Group’s right, title and interestin and to the following assets (collectively, the “**Assets”**):

###  

#### (i)                                     thefollowing Product-related items:

####  

##### (A)                              allmarketing, sales and promotional literature relating primarily to the Businessowned by or in the possession of any member of the Seller Group;

#####  

##### (B)                                inaccordance with and to the extent not prohibited by applicable law, all lists,files, bills and correspondence of or related to customers and suppliers inpossession or under control of a Business Employee as of the date hereof or asof the Closing Date and (x) related to the Business and located in theRolling Meadows facility of Seller or (y) primarily related to theBusiness and located in the locations set forth on Schedule 1.1(a)(i)(B)of the Disclosure Schedules (the “**BusinessReal Property**”);

#####  

##### (C)                                thetangible embodiments of Transferred Intellectual Property or tangibleembodiments of Intellectual Property licensed pursuant to an IntellectualProperty Contract, in both cases, related to the Business (subject to Seller’sright to retain copies pursuant to the Intellectual Property LicenseAgreement);

 

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##### (D)                               allinventory (consisting of raw materials, work in process and finished goods) ofProducts;

#####  

##### (E)                                 alltransferable licenses, permits and authorizations relating to governmentalauthorization for the manufacture and distribution of Products (excluding anygeneral business licenses to conduct business in a particular jurisdiction andthe like) (the “**Permits**”), andcopies of all reports and certifications related to the Permits or to othersimilar licenses, permits and authorizations that are not transferrable;

#####  

##### (F)                                 allspecifications, schematics, designs, drawings, blue prints, models, sketches,technical manuals, operating manuals, flow charts and related files for theProducts owned by or in possession of any member of the Seller Group (subjectto Seller’s right to retain copies pursuant to the Intellectual PropertyLicense Agreement);

#####  

##### (G)                                thefollowing intangible assets:

#####  

###### (I)            theTransferred Intellectual Property;

######  

###### (II)           allclaims for past infringement of Transferred Intellectual Property;

######  

###### (III)         all goodwill of the Business; and

######  

###### (IV)         allother intangible assets, if any, listed on Schedule 1.1(a)(i)(G)(IV) of theDisclosure Schedules;

######  

#### (ii)                                  thefollowing balance sheet items:

####  

##### (A)                              prepaidexpenses and security deposits reflected in the balance sheet of the Businessdated as of November 29, 2002 attached hereto as Exhibit A (the “**Reference Balance Sheet**”), with suchchanges thereto that occur in the ordinary course of business prior to theClosing Date;

#####  

##### (B)                                thefurniture, fixtures, equipment, furnishings and office supplies and othertangible personal property of the Business reflected in the Reference BalanceSheet, including, but not limited to, the items listed on Schedule 3.20(c) ofthe Disclosure Schedules and the one-time setup equipment contemplated by theTransition Services Agreement between Buyer and Seller dated the date hereof(subject to completion of payment of such amounts due by Buyer thereunder),with such changes thereto that occur in the ordinary course of business priorto the Closing Date; and

#####  

##### (C)                                allother assets reflected on the Reference Balance Sheet (other than accountsreceivable, which shall be retained by the Seller) with such changes theretothat occur in the ordinary course of business prior to the Closing Date;

#####  

#### (iii)                               the followingcontractual items:

####  

##### (A)                              subjectto Section 5.8, the contracts for the sale, distribution or manufacture ofthe Products or relating to technology embodied in the Products, includingamendments and supplements, modifications or side letters related thereto, setforth on Schedule 1.1(a)(iii)(A) of the Disclosure Schedules and (1) anysuch contracts entered into in compliance with the terms hereof during theperiod commencing on the date hereof and through the Closing Date (as definedin Section 1.3) and (2) any other contracts that the parties mutuallyagree to include in the Assets prior to the Closing Date, as evidenced by anamendment to

#####  

2

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##### Schedule1.1(a)(iii)(A) to be acknowledged by the parties and delivered at the Closing(collectively, the “**Contracts**”). Notwithstanding the foregoing, to the extent Seller has notprovided Buyer with executed copies of any of the Contracts for review prior tothe date hereof (each an “**Unproduced Contract**”),Seller shall, within 45 days of the date hereof, provide any such UnproducedContracts to Buyer for its review. Buyer may, in its sole discretion, refuse toaccept transfer of any such Unproduced Contracts (and such Unproduced Contractsshall immediately cease to be Contracts for all purposes of this Agreement) ifand to the extent (i) any such Unproduced Contracts contain materiallydifferent or adverse terms as compared to the Contracts provided to Buyer forreview, or (ii) Seller fails to produce any such Unproduced Contracts within 45days of the date hereof. Buyer and Seller agree to cooperate to reconcile theirlists of Unproduced Contracts within two days of the date hereof, with theobjective of minimizing the number of Unproduced Contracts; and

#####  

##### (B)                                tothe extent transferable, all rights of the Seller Group under all warranties,representations and guarantees made by suppliers, manufacturers or contractorsin connection with the Business;

#####  

#### (iv)                              inaccordance with and to the extent not prohibited by applicable law, allpersonnel and payroll records of the Affected Employees located in the RollingMeadows facility or in the Business Real Property and copies of all suchrecords located in the Seller’s facility; and

####  

#### (v)                                 copiesof all other books, records or correspondence related to the Business(excluding tax returns not related exclusively to the Business).

####  

### (b)                                 Suchsale, conveyance, assignment, transfer and delivery of the Assets will beeffected by delivery by Seller and/or other members of the Seller Group toBuyer of (i) duly executed bills of sale (each, a “**Bill of Sale**”) in the form attached hereto asExhibit B, (ii) instruments of assignment assigning each member ofthe Seller Group’s interest in and to the Transferred Intellectual Property (asdefined in Section 3.7(p)), including all Registered Intellectual Property(as defined in Section 3.7(p)) relating thereto, pursuant to the form ofAssignment of Patent Rights attached hereto as Exhibit C, Form ofAssignment of Copyrights attached hereto as Exhibit D and form ofAssignment of Trademarks obtained hereto as Exhibit E (each, an “**IntellectualProperty Assignment**”),(iii) a copy of the patents and patent applications and the registrationsand pending applications included in the Transferred Intellectual Property and(iv) such other good and sufficient instruments of sale, conveyance,transfer and assignment  as shall benecessary to vest in Buyer good and valid title to the other Assets freeand clear of all Liens, except for Permitted Encumbrances (collectively, the “**OtherInstruments”**).

###  

### (c)                                  Atthe Closing, Buyer will deliver to Seller Group an instrument of assumptionsubstantially in the form of Exhibit F hereto (the “**Instrument of Assumption”**),whereby Buyer will undertake, assume and agree to perform, pay and dischargewhen due, and hold Seller Group harmless from and indemnify Seller Groupagainst, the following debts, liabilities and obligations of Seller Grouprelated to the Business: (i) liabilities and obligations associated withthe Contracts, (ii) all warranty obligations relating to the Products orservices performed in connection with the Products, except for these warrantyobligations set forth on Schedule 1.1(c) hereto (the “**Excluded Warranty Obligations**”)****and (iii) other liabilities reflectedon the Reference Balance Sheet, with such changes thereto that occur in theordinary course of business prior to the Closing Date other than accountspayable, which shall be retained by Seller (collectively, the “**AssumedLiabilities**”).  Buyer expressly is not assuming anyobligations or liabilities, whether accrued, absolute, contingent, matured,unmatured or other, of Seller Group or any other person or entity, except forthe Assumed Liabilities (the “Excluded Liabilities”).  Without limiting the foregoing, it is expressly agreed that Buyershall not assume or have any responsibility with respect to any of thefollowing liabilities or obligations, and the following liabilities andobligations shall not constitute Assumed Liabilities: (1) any

###  

### 3

### 

###  

### liabilityor obligation for Taxes (as defined in Section 3.13) for which Seller isresponsible pursuant to Section 5.15(c) hereof; (2) any liability orobligation of Seller Group as a result of any legal or equitable action orjudicial or administrative proceeding initiated at any time in respect ofanything done, suffered to be done, or omitted to be done by the Seller Groupor any of its directors, officers, employees, or agents, except for AssumedLiabilities, or (3) related to the employment by any member of the SellerGroup of any employee of any member of the Seller Group, including, withoutlimitation, Employment Liabilities (unless specifically included in theReference Balance Sheet and except as specifically set forth herein or to theextent related to their activities as employees of Buyer following theClosing), and severance payments to employees of any member of the Seller Groupthat are not Affected Employees (as defined below).  For these purposes, “**EmploymentLiabilities**” means any and all claims, debts, liabilities,commitments and obligations, whether fixed, contingent or absolute, matured orunmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown,whenever or however arising, including all costs and expenses relating to thesatisfaction thereof, arising under applicable federal, state, county, local, provincial or foreignstatute, law, ordinance, regulation, rule, code, treaty or rule of common law(collectively, “**Law**”),permits, action or proceeding before any governmental authority, order orconsent decree or any award of any arbitrator of any kind relating to anySeller Employee Plan, Employment Agreement or otherwise to an Employee whileemployed by Seller Group.

###  

### (d)                                 Notwithstandingthe foregoing, the assets identified on Schedule 1.1(d) are expresslyexcluded from the Assets and shall be retained by the Seller Group.

###  

## ***Section1.2***                                   PurchasePrice

## *** ***

Subject to the terms and conditions of this Agreement,in reliance on the Seller Group’s representations, warranties and agreementscontained herein and in any Non-U.S. Agreements (as defined inSection 5.22), and in consideration of the sale, conveyance, assignment,transfer and delivery of the Assets, Buyer will deliver or cause to bedelivered, in full payment for the sale, conveyance, assignment, transfer anddelivery of the Assets, payment at the Closing by wire transfer to such bankaccount or bank accounts as shall be specified by Seller, in immediatelyavailable funds, of an aggregate of U.S. $100,000,000 (the “**Closing CashPurchase Price”**), which shall be subject to subsequent adjustmentpursuant to Section 1.7(d).

 

## ***Section1.3***                                   Closing

## *** ***

The closing of the transactions contemplated by thisAgreement (the “**Closing”**) shall take place not later than 10:00 A.M.,local time, at the offices of Wilson Sonsini Goodrich & Rosati PC, 650Page Mill Road, Palo Alto, California 94304-1050 on the second business dayfollowing the satisfaction or waiver of all of the conditions set forth inArticle VI hereof or at such other time or place as to which the partiesshall agree.  As provided inSection 5.4, the parties shall use reasonable best efforts to cause theClosing to occur on or prior to May 3, 2003. The effective time of the Closing is sometimes referred to herein as the“**ClosingDate**.”

 

## ***Section1.4***                                   Deliveriesby Seller

## *** ***

At the Closing, Seller Group will deliver or cause tobe delivered to Buyer (unless previously delivered or waived in writing byBuyer) the following:

 

### (a)                                  dulyexecuted Bills of Sale

###  

### (b)                                 dulyexecuted counterparts of the Intellectual Property Assignments;

###  

4

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### (c)                                  theOther Instruments

###  

### (d)                                 theofficer’s certificates referred to in Section 6.3(d);

###  

### (e)                                  theconsents referred to in Section 6.3(c);

###  

### (f)                                    certificatesof each member of the Seller Group complying with the requirements ofSection 1445 of the Internal Revenue Code of 1986, as amended (the “**Code**”), and the Treasury Regulationspromulgated thereunder, to the effect that no withholding of federal income taxis required (the “**1445 Certificates**”);

###  

### (g)                                 dulyexecuted counterpart of the Rolling Meadows, Illinois Lease Agreement,substantially in the form of Exhibit G (the “**Rolling Meadows Lease Agreement**”);

###  

### (h)                                 duly executed counterpart ofthe Multiple Site License Agreement, substantially in the form ofExhibit H, with respect to the Business Real Property identified therein(the “**Multiple Site License Agreement**”);

###  

### (i)                                     dulyexecuted counterpart of the Consulting Services Agreement, substantially in theform of Exhibit I (the “**ConsultingServices Agreement**”);

###  

### (j)                                     dulyexecuted counterpart of the Intellectual Property License Agreement,substantially in the form of Exhibit J (the “**Intellectual Property License Agreement**”);

###  

### (k)                                  dulyexecuted counterparts of two separate Lease Assignment Agreements,substantially in the form of Exhibit K, with respect to a lease for each of thefollowing two Business Real Properties (i) 100 Davidson Avenue, Somerset, NewJersey and (ii) 420 ST Kilda Road, Suite 3, Level 2, Melbourne, Australia (“**Lease Assignment Agreements**”);

###  

### (l)                                     allother documents, instruments, declarations, affidavits and writings as may (inthe judgment of Buyer) be necessary or appropriate to assign, convey, transferand deliver to Buyer good and valid title to the Assets free and clear ofall Liens except for Permitted Encumbrances or as may be required to bedelivered by Seller Group at or prior to the Closing Date pursuant to thisAgreement (the agreements referred to in this Section 1.4, as well assimilar agreements required elsewhere in the Agreement, being referred toherein as the “**Ancillary Agreements**”);and

###  

### (m)                               (i) allcopies of all tangible materials in the possession of Seller Group embodyingthe Transferred Intellectual Property (subject to Seller’s right to retaincopies pursuant to the Intellectual Property License Agreement), and(ii) a copy of all tangible materials in the possession of Seller Groupembodying the Licensed Intellectual Property, in each case including withoutlimitation specifications, documentation, invention disclosures, laboratorynotebooks, source code listings, technical manuals, flow charts, and filesrelated thereto.

###  

## ***Section1.5***                                   Deliveriesby Buyer

## *** ***

At the Closing, Buyer will deliver or cause to bedelivered to Seller, or, in the case of clause (a) below, to theaffiliates of Seller who are parties to any Non-U.S. Agreements, if applicable(unless previously delivered), the following:

 

5

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### (a)                                  theClosing Cash Purchase Price referred to in Section 1.2; provided,that if Seller Group shall fail to deliver the 1445 Certificates, Buyer may(but shall not be required to) withhold from the cash payable at the Closingand pay over to the appropriate taxing authority an amount equal to ten percent(10%) of the total “amount realized” (as defined in Internal Revenue ServiceTreasury Regulation 1.1445 - 1(g)(5)) by any member of theSeller Group for the transfer of any “U.S. real property interests” (as definedin Section 1445 of the Code).  Aportion of the Closing Cash Purchase Price shall be paid in accordance with theterms of the Non-U.S. Agreements, with the remainder paid to Seller;

###  

### (b)                                 dulyexecuted counterparts of the Intellectual Property Assignments;

###  

### (c)                                  dulyexecuted Instruments of Assumption;

###  

### (d)                                 theofficer’s certificate referred to in Section 6.2(c);

###  

### (e)                                  dulyexecuted counterpart of the Multiple Site License Agreement;

###  

### (f)                                    dulyexecuted counterpart of the Rolling Meadows Lease Agreement;

###  

### (g)                                 dulyexecuted counterpart of the Consulting Services Agreement;

###  

### (h)                                 dulyexecuted counterpart of the Intellectual Property License Agreement;

###  

### (i)                                     dulyexecuted counterparts of the Lease Assignment Agreements;

###  

### (j)                                     alist of any proceedings or actions known to any member of the Seller Groupbefore any governmental authority (including, without limitation, the U.S.P.T.O. or equivalent authority anywhere in the world) related to RegisteredIntellectual Property included in the Transferred Intellectual Property, andall actions that must be taken before the date sixty (60) days after theClosing Date, including without limitation the payment of any registration,maintenance or renewal fees or the filing of any documents, applications orcertificates, for the purposes of maintaining, perfecting or preserving theRegistered Intellectual Property included within the Transferred IntellectualProperty; and

###  

### (k)                                  allother documents, instruments and writings required to be delivered by Buyer ator prior to the Closing Date pursuant to this Agreement or the AncillaryAgreements.

###  

## ***Section1.6***                                   Post-ClosingArrangements

## *** ***

Except as set forth in any other agreement between theparties hereto, at the Closing all data processing, accounting, insurance,banking, personnel, legal, communications and other products and servicesprovided to the Business by Seller Group or its affiliates, including anyagreements or understandings (written or oral) with respect thereto, willterminate without any further action or liability on the part of the partiesthereto.

 

## ***Section 1.7***                                   Post-ClosingPurchase Price Adjustment

## *** ***

### (a)                                  Onthe tenth (10th) business day following the completion and acceptance by eachparty hereto of a statement (the “**Final Statement**”) of the Working Capital of the Business (as defined below) as ofthe close of business on the Closing Date (unless the Closing Date does notfall on the end of a monthly fiscal period of the Seller Group, in which casethe Final Statement shall be as of the last day of Seller Group’s precedingmonthly fiscal period), either (i) Buyer shall pay to Seller the amount(together with interest as

###  

### 6

### 

###  

### describedbelow) by which the Working Capital of the Business as set forth in the FinalStatement is greater than $7,771,000, which is equal to the Working Capital ofthe Business as of the date of the Reference Balance Sheet (the “**OpeningStatement**”) plus$1,000,000, or (ii) Seller shall pay to Buyer the amount (together withinterest as described below) by which the Working Capital of the Business asset forth in the Final Statement is less than $5,771,000, which is equal to theOpening Statement less $1,000,000.00. In the event of a payment pursuant to the immediately precedingsentence, such amount shall bear simple interest at an annual rate equal to theminimum Applicable Federal Rate in effect as of the Closing Date, accruing fromthe Closing Date to the date of payment.

###  

### (b)                                 TheFinal Statement shall be prepared by Seller in the following manner:

###  

#### (i)                           withinseventy-five (75) days after the Closing Date, Seller shall deliver to Buyerthe Final Statement, fairly presenting the Working Capital of the Business asof the close of business on the Closing Date. The Final Statement shall be accompanied by a report setting forth(i) the Working Capital of the Business, as reflected in the FinalStatement, and (ii) the amount of any adjustment to the Closing CashPurchase Price to be paid and by whom pursuant to Section 1.7(a) and thebasis therefor;

####  

#### (ii)                        followingthe Closing, each party shall give the other party hereto and any independentauditors and authorized representatives of such other party full access at allreasonable times to the properties, books, records and personnel of theBusiness in their possession, custody or control relating to periods prior tothe Closing Date for purposes of preparing, reviewing and resolving anydisputes concerning the Final Statement. Within thirty (30) days following the delivery to Buyer of the FinalStatement, Buyer shall notify Seller of any dispute of any item contained inthe Final Statement, which notice shall set forth in reasonable detail thebasis for such dispute.  If Buyer failsto notify Seller of any such dispute within such thirty (30)-day period, theFinal Statement shall be deemed to be accepted by Buyer.  In the event that Buyer shall so notifySeller of any dispute, Buyer and Seller shall cooperate in good faith toresolve such dispute as promptly as possible; and

####  

#### (iii)                     ifBuyer and Seller Group are unable to resolve any such dispute within fifteen(15) days of Seller’s delivery of such notice (the “**Resolution Period**”), then all amounts remaining indispute shall be submitted to a “big four” independent accounting firm (the “**IndependentAccounting Firm**”) selected by Seller Group and Buyer within ten (10)days after the expiration of the Resolution Period.  If Seller Group and Buyer are unable to agree on the IndependentAccounting Firm, then Buyer and Seller Group shall each have the right torequest the American Arbitration Association to appoint the IndependentAccounting Firm, which shall not have had a material relationship with SellerGroup or Buyer within the past two (2) years. Each party agrees to execute, if requested by the Independent AccountingFirm, an engagement letter containing customary terms.  All fees and expenses relating to the work,if any, to be performed by the Independent Accounting Firm shall be borneequally by Seller Group and Buyer.  TheIndependent Accounting Firm shall act as an arbitrator to determine, basedsolely on presentations by Seller Group and Buyer, and not by independentreview, only those issues still in dispute and shall be limited to thoseadjustments, if any, that need be made to the Final Statement to comply withthe standards referred to in Section 1.7(a).  The Independent Accounting Firm’s determination shall berequested to be made within thirty (30) days of its selection, shall be setforth in a written statement delivered to Seller and Buyer and shall be final,binding and conclusive.  The Final Statement,as modified by resolution of any disputes by Buyer and Seller Group or by theIndependent Accounting Firm, shall be the “**Final Statement**.”

####  

### (c)                                  Theterm “**WorkingCapital of the Business**”means the Current Assets (as reflected on the Reference Balance Sheet) andInventory (as reflected on the Reference Balance Sheet) less the AccruedLiabilities and Other (as reflected on the Reference Balance Sheet) (excludingDeferred Cost of Goods Sold, Deferred Revenue and Employee Liabilities (as suchitems are reflected on the Reference Balance Sheet)), as

###  

### 7

### 

###  

### calculatedin accordance with U.S. GAAP and prepared on a basis consistent with theReference Balance Sheet; provided, however, that assets andproperties (other than current assets and current liabilities that are AssumedLiabilities) that were not reflected in the Opening Statement shall not bereflected in the Final Statement.

###  

### (d)                                 Theamounts, if any, referred to in Section 1.7(a) shall be paid by the payingparty under Section 1.7(a) by wire transfer in immediately available fundsto an account designated by the other party.

###  

# **ARTICLE II**

# ** **

# **RELATEDMATTERS**

# ** **

## ***Section2.1***                                   Booksand Records of Seller Group

## *** ***

Any books and records that are related to the Businessthat are not delivered to Buyer hereunder will be preserved by Seller until atleast the third anniversary of the Closing Date and will be made available (forreview and copying at Buyer’s expense of those portions of such books andrecords related to the Business) to Buyer and its authorized representativesupon reasonable notice during normal business hours to the extent reasonablyrequired by Buyer, including, without limitation, to the extent reasonablyrequired in connection with audit, accounting, tax, litigation, federalsecurities disclosure or other similar needs. Any books and records that are transferred to Buyer hereunder will bepreserved by Buyer until at least the third anniversary of the Closing Date andwill be made available (for review and copying at Seller’s expense) to Sellerand its authorized representatives upon reasonable notice during normalbusiness hours to the extent reasonably required by Seller, including, withoutlimitation, to the extent reasonably required in connection with audit,accounting, tax litigation, federal securities disclosure or other similarneeds.

 

## ***Section2.2***                                   Mailand Check Handling

## *** ***

### (a)                                  Effectiveas of the Closing Date, Buyer shall have the right to open all mail andpackages received by Buyer and addressed to Seller related to theBusiness.  Buyer shall promptly forwardto Seller any mail or packages not related to the Business.  Buyer and Seller agree to promptly notifyeach other of any phone calls they receive that relate to the other’s business.

###  

### (b)                                 Afterthe Closing Date, Buyer may deliver to Seller any checks or drafts payable toSeller or its affiliates that are properly payable to Buyer or its affiliates,and Seller shall reimburse Buyer on a monthly basis for the amounts collectedfrom such checks or drafts.  Selleragrees that it will promptly transfer or deliver or cause to be promptlytransferred or delivered to Buyer or its designee any cash or other propertyreceived directly or indirectly by it or any of its affiliates after theClosing that are properly the property of Buyer or its affiliates.

###  

### (c)                                  Fromand after the Closing Date, Seller Group shall promptly remit to Buyer anyfunds that are received by Seller Group and that are included in or thatrepresent the Assets.  Seller Group:(i) hereby irrevocably nominates, constitutes and appoints Buyer as thetrue and lawful attorney-in-fact of Seller (with full power ofsubstitution) effective as of the Closing Date, and hereby authorizes Buyer, inthe name of and on behalf of each member of the Seller Group, to execute,deliver, acknowledge, certify, file and record any document, to institute andprosecute any legal proceeding and to take any other action (on or at any timeafter the Closing Date) that Buyer may deem appropriate for the purpose of(i) collecting, asserting, enforcing or perfecting any claim, right orinterest of any kind that is included in any of the Assets, (ii) defendingor compromising any Claim or legal proceeding relating to any of the Assets, or(iii) otherwise carrying out or facilitating any of the transactionscontemplated in this Agreement. The power of attorney referred to in the

###  

8

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### precedingsentence is and shall be coupled with an interest and shall be irrevocable, andshall survive the dissolution or insolvency of any member of the SellerGroup.  Seller agrees to take allactions necessary to obtain board and stockholder approval of the transactionscontemplated by this Agreement for each member of the Seller Group, as applicable.

###  

## ***Section2.3***                                   Employeesand Employee Benefits

## *** ***

### (a)                                  Priorto the Closing, Buyer may, in its sole discretion, offer to employ any BusinessEmployee (as defined in Section 3.14(b)) on an at-will basis and pursuantto the terms of the offer presented by Buyer, which may vary from the terms ofemployment with Seller.  If requested bySeller, Buyer shall provide Seller with such information relating to the termsof Buyer’s offer of employment to the Eligible Employees as is reasonablynecessary to allow Seller to determine whether or not the Eligible Employeesmay be entitled to severance benefits from Seller.  Buyer shall communicate in writing to Seller as soon aspracticable the names of those Business Employees to whom Buyer determines itwill not make offers of employment. Buyer shall finalize its list of Business Employees to which it willmake offers of employment (the “**EligibleEmployees**”) and communicate that list to Seller no later than theearlier to occur of: (i) Closing or (ii) the forty-fifth day afterthe date of this Agreement.  When theBuyer communicates to Seller in writing that it will not offer employment to anEligible Employee, such person shall cease to be an Eligible Employee but shallcontinue to be a Business Employee. Buyer shall make good faith offers of employment to at least 300Business Employees.  Such EligibleEmployees who become employees of Buyer following the Closing are referred toherein as the “**Affected Employees**.” Prior to Closing, Seller Group shall provide Buyer with a list of allindependent contractors currently providing services primarily related to theBusiness.  Seller Group shall beresponsible, except as otherwise specifically provided herein, for allobligations and Employment Liabilities of Business Employees up to andincluding the Closing Date, including any severance payments of such employeesarising in connection with the termination of their employment with the SellerGroup, the Ancillary Agreements and any Employment Liabilities.  Seller Group shall be responsible for allobligations to and Employment Liabilities of all Business Employees up to andfollowing the Closing, except for Affected Employees, with respect to whomSeller Group shall be responsible for all obligations and Employment Liabilitiesup to the Closing.  Following theClosing, the Affected Employees shall become participants in the employeebenefit plans of Buyer as the Affected Employees become eligible to participatein such plans pursuant to their terms. For purposes of this Agreement, Buyer’s employee benefit plans include,but are not limited to, all “employee benefit plans” within the meaning ofSection 3(3) of the Employee Retirement Income Security Act of 1974, asamended (“**ERISA**”), and employee fringe benefitprograms of Buyer.  Seller Group shalluse commercially reasonable efforts, upon Buyer’s request, and at Buyer’sexpense to assist in the transition of Affected Employees to Buyer.  From and after the Closing, Seller Groupshall (i) sponsor, (ii) assume or (iii) retain, as the case maybe, and be solely responsible for all Employment Liabilities whether incurredbefore, on or after the Closing.

###  

As soon as practicable following the Closing Date,Seller Group shall provide Buyer with such documents as Buyer shall reasonablyrequest to assure itself that the accounts of the Affected Employees under the3Com Corporation 401(k) Plan (“**Seller Savings Plan**”) if distributed to such Affected Employees, would be eligiblerollover distributions and with such documents and other information as Buyershall reasonably request to assure itself that the Seller Savings Plan and thetrust established pursuant thereto are qualified and tax-exempt underSections 401(a) and 501(a) of the Code. Effective as of the Closing Date, each Affected Employee who was aparticipant in the Seller Savings Plan shall cease to have any contributionsmade on his or her behalf, except for contributions attributable tocompensation earned on or before such date under such Seller Savings Plan.  Each Affected Employee who is a participantin a Seller Savings Plan shall be given the opportunity to “roll over” suchaccount balance by way of an eligible rollover distribution to the UTStarcom,Inc. 401(k) Plan (the “**Buyer401(k) Plan**”), subject to the approval of the administrator ofthe Buyer 401(k) Plan and in accordance with the provisions of such Planand applicable

 

9

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Law.  Notwithstanding anythingin this Agreement to the contrary, each Affected Employee who was eligible toparticipate in a Seller Savings Plan will first become eligible to participatein the Buyer 401(k) Plan as soon as reasonably practicable after theClosing Date and pursuant to the terms of such plan.

 

### (b)                                 SellerGroup agrees and acknowledges that the selling group (as defined in TreasuryRegulation Section 54.4980B-9, Q&A-3(a)) of which it is a part (the “**Selling Group**”) will continue to offer agroup health plan to its employees after the Closing Date to the extentrequired by Law and, accordingly, that Seller and the Selling Group shall besolely responsible for providing continuation coverage under the ConsolidatedOmnibus Budget Reconciliation Act of 1985, as amended (“**COBRA**”) to those individuals who areM&A qualified beneficiaries (as defined in Treasury RegulationSection 54.4980B-9, Q&A-4(a)) with respect to the transactionscontemplated by this Agreement (collectively, the “**M&A Qualified Beneficiaries**”).  The members of the Seller Group shall be responsible for allCOBRA obligations, liabilities and claims related to M&A QualifiedBeneficiaries and all other qualified beneficiaries (as defined in CodeSection 4980B(g)(1)) with respect to Seller Group’s health plans.

###  

### (c)                                  Buyershall provide each Affected Employee credit, for purposes of any servicerequirements for participation or vesting (and not for benefit accrualpurposes), under each employee benefit plan, program, or arrangement of theBuyer or its affiliates in which such employee is eligible to participate, forhis or her periods of service with the Seller or any Subsidiary, asappropriate, credited under a similar plan, program or arrangement prior to theClosing Date or as reflected in Seller’s or any Subsidiary’s records, asapplicable, which method of crediting service shall be at Buyer’s discretion,subject to appropriate break-in-service rules (or other applicable legalrestrictions) and the applicable provisions of the Buyer’s employee benefitplan, program or arrangement and applicable tax qualification requirements.  Notwithstanding any of the foregoing to thecontrary, none of the provisions contained herein shall operate to duplicateany benefit provided to any Affected Employee or the funding of any suchbenefit.

###  

### (d)                                 Nothingcontained herein, expressed or implied, is intended to confer upon any AffectedEmployee any right to continued employment for any period by reason of thisAgreement.  Nothing contained herein isintended to confer upon any Affected Employee any particular term or conditionof employment other than with respect to the particular employee benefit plansor severance plans, policies or arrangements expressly referred to in thisAgreement.

###  

### (e)                                  Buyershall neither assume nor substitute for any outstanding options to purchaseSeller common stock or any other equity-based compensation award held byAffected Employees.  Affected Employeesshall only be eligible to participate in the Buyer’s equity plans (includingthe Buyer’s Employee Stock Purchase Plan) pursuant to the terms and conditionsof such plans.

###  

### (f)                                    Selleragrees to use commercially reasonable efforts to encourage the EligibleEmployees to accept any offers of employment extended by Buyer pursuant toBuyer’s standard form of employment offer letter.  Buyer shall have the right, within forty-five (45) days of thedate of this Agreement, to designate twenty (20) Business Employees withexpertise related to “voice over Internet protocol” technology, products andservices as “**Designated Employees**.”  In the event any Designated Employee rejectsBuyer’s offer of employment, such Designated Employee shall become an “**Ineligible Employee**.”  Seller may elect to retain or hire up to sixIneligible Employees without any obligation to Buyer.  However, to the extent Seller retains or hires more than sixIneligible Employees at any time through the one-year anniversary of theClosing Date, Seller shall be obligated to pay to Buyer a sum equal to twelve(12) months of salary then paid by Seller of each such retained or hiredemployee (in excess of six).

###  

10

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# **ARTICLE III**

# ** **

# **REPRESENTATIONSAND WARRANTIES OF SELLER GROUP**

# ** **

The Seller, on behalf of itself and each member of theSeller Group, represents and warrants to Buyer as follows subject to suchexceptions as are disclosed in a disclosure schedule supplied by Seller toBuyer (the “**Disclosure Schedules**”):

 

## ***Section3.1***                                   Organization

## *** ***

Each member of the Seller Group is a corporation duly organized,validly existing and in good standing under the Laws of its jurisdiction of incorporation.  Each member of the Seller Group is dulyqualified or licensed to do business in each jurisdiction in which theownership or leasing of property, the operation of the Business, the nature ofthe Business or the conduct of Seller Group’s employees makes suchqualification necessary.  The members ofthe Seller Group are all of the entities of Seller that are engaged in theBusiness or that hold title to the Assets.

 

## ***Section3.2***                                   Authorization

## *** ***

### (a)                                  Sellerhas the corporate power and authority to execute and deliver this Agreement andthe Ancillary Agreements (to which it is a party) and consummate or cause to beconsummated the transactions contemplated hereby and thereby.  The execution and delivery of this Agreementand the Ancillary Agreements (to which Seller is a party) by Seller and theconsummation of the transactions contemplated hereby and thereby have been dulyand validly authorized by the Board of Directors of Seller and no othercorporate proceedings including, without limitation, a vote of Seller’sstockholders, on the part of Seller is necessary to authorize the execution,delivery and performance of this Agreement, the Ancillary Agreements (to whichit is a party) or the consummation of the transactions contemplated hereby andthereby.  This Agreement and theAncillary Agreements (to which Seller is a party) have been duly executed anddelivered by Seller and constitute, and when executed and delivered, each ofthe other agreements, documents and instruments to be executed and delivered bySeller pursuant hereto will constitute, a valid and binding agreement of Sellerenforceable against Seller in accordance with their respective terms.

###  

### (b)                                 Eachother member of the Seller Group has, or will have prior to the Closing, thecorporate power and authority to execute and deliver the Ancillary Agreementsand/or other documents and instruments required to be delivered by such partyat the Closing pursuant to the terms of this Agreement (the “**Required Documents**”) and consummate orcause to be consummated the transactions contemplated hereby and thereby.  The execution and delivery of the RequiredDocuments by each member of the Seller Group (other than Seller) has been, orwill be prior to the Closing, duly and validly authorized by the Board of Directorsof such member and has been, or will be prior to the Closing, approved byrequisite votes of the stockholders of such member, as necessary, and no othercorporate proceedings on the part of the members of the Seller Group (otherthan Seller) will be necessary as of the Closing to authorize the execution,delivery and performance of any of the Required Documents or the consummationof the transactions contemplated hereby and thereby. The Required Documentswill be duly executed and delivered at the Closing by each member of the SellerGroup, and when executed and delivered, will constitute, valid and bindingagreements or obligations of such member enforceable against such member, asapplicable, in accordance with their respective terms.

###  

### 11

### 

###  

## ***Section3.3***                                   Consentsand Approvals; No Violations

## *** ***

### (a)                                  Exceptfor applicable requirements of the Hart-Scott-Rodino Act AntitrustImprovements Act of 1976, as amended (the “**HSRAct**”), or antitrust or other competition Law of other jurisdictions,there are no governmental approvals or consents required for the execution,delivery or performance of this Agreement or the consummation by each member ofthe Seller Group of the transactions contemplated hereby or by the AncillaryAgreements.

###  

### (b)                                 Exceptas set forth on Schedule 3.3 of the Disclosure Schedules, the execution,delivery and performance of this Agreement and the Ancillary Agreements and theconsummation by each member of the Seller Group of the transactions contemplatedhereby and thereby will not (i) conflict with or result in any breach orviolation of any provision of the certificate of incorporation, bylaws or othercomparable charter documents of any member of the Seller Group;(ii) require any member of the Seller Group to file or register with, orgive notice to, or obtain the authorization, consent or approval of any person(other than a governmental entity contemplated in clause (a) above)whether within or outside the United States; (iii) violate, conflict withor result in a default (or any event that, with notice or lapse of time orboth, would constitute a default) under, or result in any termination,cancellation, modification or acceleration or give rise to any such right oftermination, cancellation, modification or acceleration under, any of theterms, conditions or provisions of any note, mortgage, other evidence ofindebtedness, guarantee, license, agreement, lease or other contract orinstrument or obligation to which any member of the Seller Group is a party orby which any member of the Seller Group or any of their Assets are subject orby which any member of the Seller Group may be bound (the “**Seller Conflicting Agreements**”);(iv) violate any order, injunction, decree, statute, rule or regulationapplicable to any member of the Seller Group or any of their assets orproperties, or (v) result in the creation or imposition of any Lien uponany properties, assets or business of the Business. As used in thisSection 3.3, references to members of the Seller Group shall refer only tomembers of the Seller Group in connection with the conduct of the Business.

###  

## ***Section3.4***                                   FinancialStatements

## *** ***

Attached as Schedule 3.4 of the DisclosureSchedules are (i) the Reference Balance Sheet, (ii) the unaudited balancesheet of the Business as of the end of its fiscal year on or about May 31,2002, (iii) the related unaudited statements of income of the Business forthe six months ended November 29, 2002, and (iv) the relatedunaudited statements of income of the Business for the fiscal year ended on orabout May 31, 2002  (the financialstatements referred to in clauses (i) through (iv) above and theaccompanying notes thereto, if any, are referred to herein collectively as the“**FinancialStatements**”), whichhave been extracted from the books and records of Seller Group, which books andrecords are the basis for Seller’s audited consolidated financial statements.Except as disclosed in the Financial Statements or on Schedule 3.4 of theDisclosure Schedules, the Financial Statements have been prepared in accordancewith U.S. generally accepted accounting principles (“**GAAP**”), consistently applied, and the rules and regulations ofthe Securities and Exchange Commission and fairly present in all materialrespects the financial condition of the Business as of such date and theresults of operations of the Business for such periods.

 

## ***Section3.5***                                   Absenceof Undisclosed Liabilities

## *** ***

Except for liabilities and contingent claims(i) incurred in the ordinary course of business and (ii) as otherwisedisclosed herein or on Schedule 3.5 of the Disclosure Schedules or anyother schedule of the Disclosure Schedules or the Financial Statements (orNotes thereto), the Business does not have any liabilities or contingent claims(whether direct, indirect, accrued or contingent).

 

12

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## ***Section3.6***                                   Absenceof Certain Changes

## *** ***

Except as set forth on Schedule 3.6 of theDisclosure Schedules or as otherwise contemplated by this Agreement, since November 29,2002:

 

### (a)                                  Eachmember of the Seller Group has carried on the Business in the ordinary courseconsistent with past practice and there has not been any Material AdverseEffect (as defined below); and

###  

### (b)                                 Nomember of the Seller Group has:

###  

#### (i)                                     sold,assigned, licensed, transferred, conveyed or otherwise disposed of any of theAssets with a fair market value in the aggregate in excess of $100,000, exceptin connection with the sale or license of Products to customers in the ordinarycourse of business;

####  

#### (ii)                                  madeany loans, advances (other than advances in the ordinary course of business) orcapital contributions to, or investments in, any other person on behalf of theBusiness;

####  

#### (iii)                               terminated, modified,transferred or amended any of the Permits (including Environmental Permits) orContracts, except in the ordinary course of business;

####  

#### (iv)                              enteredinto any new agreement related to the Business other than renewals of existingagreements or otherwise in the ordinary course of business;

####  

#### (v)                                 increasedin any manner the compensation (cash, equity or otherwise) of, or paid anybonus to or increased any bonus level of, any of the Eligible Employees, exceptfor such increases as are granted in the ordinary course of business consistentwith past practice in accordance with the terms of any employment contract orcollective bargaining agreement as currently in effect;

####  

#### (vi)                              adopted,granted, extended or increased in any material manner the rate or terms of anyinsurance, pension or other employee benefit plan, payment or arrangement madeto, for or with any Eligible Employees, except increases required by anyapplicable Law;

####  

#### (vii)                           terminated the employment ofany Eligible Employee, except for cause;

####  

#### (viii)                        made any change in any of theBusiness’ present accounting methods and practices;

####  

#### (ix)                                licensedany intellectual property rights of the Business to or from any third partypursuant to an arrangement other than in the ordinary course of business;

####  

#### (x)                                   madeor authorized any capital expenditures on behalf of the Business other than inaccordance with the Business’ annual plan or other than capital expendituresnot exceeding $50,000 individually or $200,000 in the aggregate;

####  

#### (xi)                                incurredany indebtedness for borrowed money, issued any debt securities or assumed,guaranteed or endorsed the obligations of any other persons on behalf of theBusiness or subjected any of the Assets to any Liens;

####  

#### (xii)                             canceled or compromisedany material debt or claim or waived or released any material rights of theBusiness; or

####  

#### 13

#### 

####  

#### (xiii)                          entered into any agreement onbehalf of the Business to do any of the foregoing.

####  

### (c)                                  Otherthan claims made in the ordinary course of business, there are no claimsagainst any member of the Seller Group to return Products by reason of allegedovershipments, defective Products or otherwise.  There are no Products of the Business in the hands of customersunder an understanding that such Products would be returnable other than in theordinary course of business or pursuant to written contractual provisions whichhave been made available to Buyer.

###  

As used in this Agreement, “**Material Adverse Effect**” shall mean any change, circumstanceor effect which, individually or in the aggregate, has had or would reasonablybe expected to have a material adverse change in, or effect on the Assets takenas a whole or the business, financial condition or results of operations of theBusiness taken as a whole or on the ability of any member of the Seller Groupto consummate the transactions contemplated hereby or by the AncillaryAgreements; provided, however, that none of the following shallbe a Material Adverse Effect: (i) changes in industry or markets in whichthe Business operates, (ii) changes resulting from the permitteddisclosure of this Agreement or the transactions contemplated hereby,(iii) changes in the U.S. or world economy or business condition or (iv)not satisfying any estimated or projected results of the Business.

 

## ***Section3.7***                                   IntellectualProperty

## *** ***

### (a)                                  Schedule 3.7(a)of the Disclosure Schedules lists all Registered Intellectual Property withinthe Transferred Intellectual Property. To the Knowledge of Seller, each such item of the RegisteredIntellectual Property is valid, all necessary registration, maintenance andrenewal fees due prior to the date of this Agreement in connection with suchRegistered Intellectual Property have been paid, and all necessary documentsand certificates required to be filed prior to the date of this Agreement inconnection with such Registered Intellectual Property have been filed with therelevant authorities in the United States or other foreign jurisdictions forthe purposes of maintaining such Registered Intellectual Property.

###  

### (b)                                 Exceptas set forth on Schedule 3.7(b) of the Disclosure Schedules, Seller oranother member of the Seller Group is the exclusive owner of each item ofTransferred Intellectual Property, and no Transferred Intellectual Property isjointly owned.

###  

### (c)                                  Exceptas set forth on Schedule 3.7(c) of the Disclosure Schedules, (i) eachitem of Transferred Intellectual Property, including without limitation allRegistered Intellectual Property which is listed on Schedule 3.7(a) of theDisclosure Schedules, is free and clear of any Liens and (ii) there are noagreements between any person and Seller or any member of the Seller Groupencumbering or restricting the transfer or sale of the Transferred IntellectualProperty to Buyer in the manner contemplated by this Agreement.

###  

### (d)                                 Exceptas set forth on Schedule 3.7(d) of the Disclosure Schedules, noTransferred Intellectual Property is subject to any proceeding (other thanprosecution by Seller of applications and registrations before the U.S.P.T.O.and relevant authorities of foreign jurisdictions) or other outstanding decree,order, judgment, agreement or stipulation that restricts in any manner thetransfer thereof by any member of the Seller Group at the Closing or thataffects the validity, use or enforceability of the Transferred IntellectualProperty.

###  

### (e)                                  Exceptas set forth on Schedule 3.7(e) of the Disclosure Schedules and except for(i) potential license grant obligations resulting from participation instandards organizations (whether official or de facto), and (ii) impliedlicenses to manufacturers, service providers and customers, no member of theSeller Group has granted any license or right, that is still in effect, in orto any Transferred Intellectual Property to any

###  

### 14

### 

###  

### otherperson and no member of the Seller Group has transferred or licensed anyIntellectual Property prior to the Closing in contemplation of thistransaction.

###  

### (f)                                    Exceptas set forth on Schedule 3.7(f) of the Disclosure Schedules, off-the-shelfpackaged software, internal software tools and potential licenses pursuant toparticipation in standards organizations (whether official or de facto):(i) to the Knowledge of Seller, the Transferred Intellectual Property andthe Licensed Intellectual Property, along with the rights in Third PartyIntellectual Property granted to Seller under the Intellectual PropertyContracts transferred to Buyer hereunder and the rights licensed under theIntellectual Property License Agreement, constitute all Intellectual Propertythat is used in or necessary for the Business; and (ii) the use andexploitation of the Assets in the manner such Assets are used prior to theClosing, including without limitation the operation of the Business, includingthe manufacture, use and sale of the Products, by Buyer following the Closingwill not infringe any Intellectual Property owned by the Seller Group and nototherwise licensed to Buyer under the Intellectual Property License Agreement.

###  

### (g)                                 Exceptas set forth on Schedule 3.7(g) of the Disclosure Schedules, to theKnowledge of Seller, the operation of the Business, including the manufacture,use and sale of the Products, does not infringe or misappropriate theIntellectual Property of any person, or constitute unfair competition or tradepractices under the Laws of any jurisdiction; and (ii) the Seller Grouphas not received written notice claiming that the operation of the Business,including the manufacture, use and sale of the Products, or the use or sale ofany Assets, infringes or misappropriates the Intellectual Property of anyperson or constitutes unfair competition or trade practices under the Laws ofany jurisdiction.

###  

### (h)                                 Schedule 3.7(h)of the Disclosure Schedules includes all contracts related to the Business, towhich any member of the Seller Group is a party with respect to any Third PartyIntellectual Property and that are being transferred to Buyer under thisAgreement.  Except as disclosed onSection 3.7(h) of the Disclosure Schedules, no person other than Sellerhas by virtue of any agreement which a member of the Seller Group is a party,ownership rights to improvements in Transferred Intellectual Property, whichimprovements are made by any member of the Seller Group.

###  

### (i)                                     Exceptas disclosed on Schedule 3.7(i) of the Disclosure Schedules, to theKnowledge of Seller, no person is infringing or misappropriating any of theTransferred Intellectual Property.  Eachmember of the Seller Group has taken such reasonable steps as are required toprotect rights in confidential information and Trade Secrets constituting theTransferred Intellectual Property, Licensed Intellectual Property and ThirdParty Intellectual Property.

###  

### (j)                                     Schedule 3.7(j)of the Disclosure Schedules lists all Trademark applications and registrations,including intent to use applications, that are used by any member of the SellerGroup in connection with the Business.

###  

### (k)                                  Schedule 3.7(k)of the Disclosure Schedules lists all Products.

###  

### (l)                                     Neitherthis Agreement nor the transactions contemplated by this Agreement, includingthe assignment to Buyer, by operation of Law or otherwise, of any contracts oragreements to which the Seller or its subsidiaries is a party, will result in(i) any third party being granted rights or access to, or the placement inor release from escrow, of any software source code or other technologyincluded in the Transferred Intellectual Property, (ii) to Seller’sKnowledge, Buyer granting to any third party any right in any IntellectualProperty other than those granted by Seller or its subsidiaries prior to theClosing, (iii) Buyer being bound by, or subject to, any non-competeor other restriction on the operation or scope of its businesses, other thanthose imposed on Seller or its subsidiaries prior to the Closing, or(iv) Buyer being obligated to pay any royalties or other amounts to anythird party with respect to the Business in excess of those payable by theSeller or its

###  

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### subsidiariesprior to the Closing under any Contracts other than pursuant to any agreementthat Buyer may need to execute after the Closing Date in connection with theconsummation of the transactions contemplated hereby.

###  

### (m)                               Schedule 3.7(m)of the Disclosure Schedule lists all material compilers, development tools, libraryfunctions and files, and the like that, to the Knowledge of Seller, arecurrently in use by the Seller Group in connection with the TransferredIntellectual Property or Licensed Intellectual Property, and that are notincluded in the Transferred Intellectual Property or Licensed IntellectualProperty, other than generally commercially available products.  Except as set forth on Schedule 3.7(m) ofthe Disclosure Schedules, to the Knowledge of Seller, no open source or publiclibrary software, including any version of any software licensed pursuant toany GNU public license, is, in whole or in part, embodied or incorporated intoany Product.  Schedule 3.7(m) ofthe Disclosure Schedules lists all licenses of Products in source code formatof software incorporated into Products (other than Products that are written innon-compiled programming languages).** **EachProduct conforms in all material respects to the specifications anddocumentation therefor and is otherwise in compliance with applicable Law.  Without limiting the foregoing, (1) theProducts (i) will record, store, process, calculate and present calendardates falling on and after (and if applicable, spans of time including)January 1, 2000, and will calculate any information dependent on orrelating to such dates in the same manner, and with the same functionality,data integrity and performance, as the products record, store, process,calculate and present calendar dates on or before December 31, 1999, orcalculate any information dependent on or relating to such dates, and(ii) lose no functionality with respect to the introduction of recordscontaining dates falling on or after January 1, 2000; (2) the Sellerhas secured any export licenses that were necessary for the distribution bySeller or its subsidiaries of the Products outside the United States; and(3) the Products do not contain any virus, Trojan horse, worm, or othersoftware routines or hardware components designed to permit unauthorizedaccess, or to disable, erase, or otherwise harm software, hardware or data inan unauthorized manner.

###  

### (n)                                 Forpurposes of this Agreement:

###  

#### (i)                                     “**IntellectualProperty**” means anyand all rights in, arising out of, or associated with: (A) all UnitedStates and foreign patents and utility models and applications therefor and allreissues, divisions, renewals, extensions, provisionals, continuations andcontinuations-in-part thereof, and equivalent or similar rights anywhere in theworld in inventions and discoveries (“**Patents**”); (B) all inventions (whether patentable or not), inventiondisclosures, improvements, trade secrets, proprietary information, know how,technology, technical data and customer lists which have not been publiclydisclosed, and all documentation embodying or evidencing any of the foregoing (“**TradeSecrets**”);(C) all copyrights, copyrights registrations and applications therefor andall other rights corresponding thereto throughout the world (“**Copyrights**”); (D) all mask works, mask workregistrations and applications therefor, and any equivalent or similar rightsin semiconductor masks, layouts, architectures or topology (“**Maskworks**”); (E) all industrial designsand any registrations and applications therefor throughout the world;(F) all trade names, logos, common law trademarks and service marks,trademark and service mark registrations and applications therefor and allgoodwill associated therewith throughout the world (“**Trademarks**”); (G) all World Wide Webaddresses, Uniform Resource Locators, and domain names; and (H) anysimilar, corresponding or equivalent rights to any of the foregoing anywhere inthe world.

####  

#### (ii)                                  “**Intellectual****Property Contract**” means any and all Contracts to whichany member of the Seller Group is a party, pursuant to which a member of theSeller Group obtained any right to use or otherwise exploit any Third PartyIntellectual Property.

####  

#### (iii)                               “**Licensed****Intellectual Property**” has the meaning set forth in theIntellectual Property License Agreement.

####  

#### 16

#### 

####  

#### (iv)                              “**Products**”means (A) any existing product or product in development listed inSchedule 3.7(n)(iv) of the Disclosure Schedules.

####  

#### (v)                                 “**RegisteredIntellectual Property**”means all United States, international and foreign: (A) Patents andapplications therefor, (B) Trademark registrations and applications,intent-to-use applications; (C) Copyright registrations and applications;(D) any registrations and applications to register Maskworks;(E) registrations for Uniform Resource Locators, worldwide web site addressesand domain names; and (F) any other application, certificate, filing,registration or other document issued by, filed with, or recorded by, anystate, government or other public legal authority claiming, evidencing, orrecording any Intellectual Property.

####  

#### (vi)                              “**Third Party Intellectual Property**” means any Intellectual Property usedby the Seller Group in the Business not owned by any member of the SellerGroup, but to which a member of the Seller Group has a right to use orotherwise exploit pursuant to a written agreement.

####  

#### (vii)                           “**Transferred****Intellectual Property**” means the Intellectual Propertyowned, in whole or in part, by any member of the Seller Group and is:(a) used in the Business; and (b) not used by any member of theSeller Group other than related to the Business.  Notwithstanding the foregoing, “Transferred IntellectualProperty” shall also include all Intellectual Property embodied in the Productsand all Registered Intellectual Property, in each case that is set forth onSchedule 3.7(n)(vii)(A) of the Disclosure Schedules.

####  

### (o)                                 TheProducts include all products currently sold under the COMMWORKS trademark.

 

### (p)                                 Schedule 3.7(p)of the Disclosure Schedules sets forth a list of all standards agreements andorganizations which any member of the Seller Group or any of their officers,directors or employees are members and which may by virtue of such membershiphave rights in, or the other members of which may have rights in, theTransferred Intellectual Property, provided that Seller shall have the right toupdate such Schedule 3.7(p) of the Disclosure Schedule prior to theClosing Date pursuant to Section 5.18 hereof.

 

## ***Section3.8***                                   Title,Ownership and Related Matters

## *** ***

### (a)                                  Asused in this Agreement, the term “**Liens**” shall mean any pledge, mortgage, charge, claim, title defect,security interest, conditional and installment sales agreement, encumbrance orother lien.  As used herein, the term “**PermittedEncumbrances**” shallmean (i) Liens for current Taxes not yet due or Taxes being contested ingood faith, (ii) mechanics’, materialmen’s, warehousemen’s, contractors’,workmens’, repairmens’, carriers’ and similar Liens attaching by operation oflaw, incurred in the ordinary course of business and securing payments notdelinquent or payments which are being contested in good faith, which are not,individually or in the aggregate, material, (iii) the rights, if any, ofthird-party suppliers or other vendors having possession of equipment of theBusiness, (iv) imperfections of title, easements and zoning restrictionson real property, if any, which do not materially impair the use of such realproperty or the operations of the Business thereon and (v) those itemslisted on Schedule 3.8(a) of the Disclosure Schedules.

###  

### (b)                                 Schedule 3.8(b)of the Disclosure Schedules contains a complete and correct list, as of thedate hereof, of all Business Real Property subject to a lease or sublease (the“**Leased Real Property**”).  Schedule 3.8(b) sets forth, for each of theLeased Real Property, the address, landlord and tenant for each such lease orsublease (the “**Leases**”).  A member of the Seller Group holds a validleasehold interest in the Leased Real Property, in each case, subject only tothe terms, covenants and conditions of the applicable Lease or any Liens orother encumbrances created by the landlord or predecessors to thelandlord.  Seller has delivered true,correct and complete copies of all Leases with respect to the Leased RealProperty, including all amendments, assignments and agreements relating theretoto Buyer.  As of the date hereof, allLeases

###  

### 17

### 

###  

### relatingto the Leased Real Property are in full force and effect and constitute legal,valid and binding obligations of Seller or other members of the SellerGroup.  There exist no defaults orconditions which with the giving of notice or the passage of time, or both,would constitute a default by any member of the Seller Group, or to theKnowledge of Seller, the other party or parties thereto with respect to theLeases for the Leased Real Property.  Nomember of the Seller Group (i) has transferred any portion of itsleasehold interest in any of the Leases (including, without limitation, bysublease, assignment or otherwise); nor (ii) is permitting any unrelatedthird parties to occupy any premises subject to any of the Leases other thanpursuant to the written terms of such Leases.

###  

### (c)                                  (i) Tothe Knowledge of Seller, the use and operation by Seller Group of the BusinessReal Property does not violate any instrument of record or agreement affectingthe Business Real Property; (ii) to the Knowledge of Seller, there is noviolation of any covenant, condition, restriction, or easement relating to theBusiness Real Property; (iii) no member of the Seller Group has receivednotice of violations of any applicable building, zoning, subdivision, land useand other similar applicable Laws affecting the Business Real Property (“**RealProperty Laws**”);(iv) to the Knowledge of Seller, none of the Business Real Property issubject to any pending or threatened suit for condemnation or other taking byany governmental authority; and (v) all utilities (including, withoutlimitation, electricity, water, heat, ventilation and air conditioning)necessary for the use of the Business Real Property for its current use by theBusiness are available to the Business Real Property.

###  

### (d)                                 Tothe Knowledge of Seller, all Inventory of the Business, whether reflected onthe Reference Balance Sheet or subsequently acquired or manufactured, consistsof a quality and quantity expected to be usable and/or salable in the ordinarycourse of business, except for inventory that is considered by the Seller to beexcess or obsolete and which has been written down in accordance with Seller’snormal accounting practices and in accordance with GAAP applied consistent withthe Reference Balance Sheet.

###  

### (e)                                  Exceptas set forth on Schedule 3.8(e) of the Disclosure Schedules, Seller Grouphas, and at the Closing Seller Group will deliver to Buyer, good and validtitle to the Assets (other than such real property subject to leases, which isaddressed in subsection (b)), free and clear of all Liens except forPermitted Encumbrances.

###  

## ***Section3.9***                                   Subsidiaries

## *** ***

Set forth on Schedule 3.9 of the DisclosureSchedules is an organizational chart and a complete and accurate list of all ofthe subsidiaries of Seller that hold any of the Assets, specifying oppositeeach such subsidiary (i) the jurisdiction in which such entity isincorporated or organized, (ii) the jurisdictions in which such entity isrequired to be registered for the Business to be conducted as conductedimmediately prior to the Closing, (iii) a description of the Assets heldor the operations related to the Business conducted by such entity and(iv) the number of Eligible Employees employed by such subsidiary.  Except as set forth on Schedule 3.9, nosubsidiary of Seller holds any right in an asset or property, tangible orintangible, related to the Business or conducts any operations related to theBusiness.

 

## ***Section3.10***                            Litigation;Product Liability

## *** ***

### (a)                                  Exceptas set forth on Schedule 3.10(a) of the Disclosure Schedules, there are noclaims, actions, suits, administrative, arbitration or other inquiries,investigations or proceedings (collectively, “**Cases**”) pending, or, to the Knowledge of Seller, threatened, againstany member of the Seller Group or any of its properties, assets and businessoperations, as of the date hereof, by or before any court, governmental orregulatory authority or by any third party, in each case related to theBusiness.  No member of the Seller

###  

### 18

### 

###  

### Group issubject to any judgments, orders or decrees entered in any lawsuits orproceedings related to the Business.

###  

### (b)                                 Exceptas set forth on Schedule 3.10(b) of the Disclosure Schedules, as of thedate hereof, there are no pending, or, to the Knowledge of Seller, threatenedcivil, criminal or administrative actions, suits, demands, claims, notices ofviolation, investigations, proceedings or demand letters against any member ofthe Seller Group relating to any alleged hazard or alleged defect in design,manufacture, materials or workmanship, including any failure to warn or allegedbreach of express or implied warranty or representation, relating to anyproduct manufactured, distributed or sold by or on behalf of any member of theSeller Group with respect to the Business. Seller has provided Buyer with true and complete copies of (or forms of)all written warranties, indemnifications or guarantees with respect to Productsthat Seller Group has extended to any of its customers.

###  

## ***Section3.11***                            Compliancewith Applicable Law

## *** ***

### (a)                                  Exceptas set forth on Schedule 3.11(a) of the Disclosure Schedules, each memberof the Seller Group has conducted and conducts the Business in compliance inall material respects with all applicable Laws, orders, ordinances, rules andregulations of any federal, state, local or foreign governmental authorityapplicable to the Business (other than Environmental Laws, which are governedby Section 3.15).

###  

### (b)                                 Exceptas disclosed on Schedule 3.11(b) of the Disclosure Schedules:

###  

#### (i)                                     themembers of the Seller Group hold all governmental licenses necessary for theoperation of the Business as presently conducted by Seller Group (the “**Licenses**”) (as used in this Agreement, theterm “Licenses” shall not be deemed to include any Environmental Permits orEnvironmental Laws, referred to in Section 3.15);

####  

#### (ii)                                  tothe Knowledge of Seller each License is valid, binding and in full force andeffect; and

####  

#### (iii)                               no member of the SellerGroup is, nor has it received any written or, to the Knowledge of Seller, oralnotice that it is, in default (or with the giving of notice or lapse of time orboth, would be in default) under any License.

####  

## ***Section3.12***                            CertainContracts and Arrangements

## *** ***

Except as set forth on Schedule 3.12 of theDisclosure Schedules, as of the date hereof and as related to the Business, nomember of the Seller Group is a party to contracts in any of the followingcategories that remain executory:

 

### (a)                                  collectivebargaining agreement covering Business Employees;

###  

### (b)                                 employmentor consulting agreement (for an individual consultant) related to the Businessproviding for total annual payments in excess of $200,000;

###  

### (c)                                  indenture,mortgage, note, installment obligation, agreement or other instrument relatedto the Business, in each case relating to the borrowing of money (other thanintercompany accounts, which shall be governed by Section 1.9 hereof), orthe guaranty of any obligation for the borrowing of money, except any suchagreement with an aggregate outstanding principal amount not exceeding$200,000;

###  

19

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### (d)                                 partnership,joint venture or other similar agreement or arrangement related to the Businessrequiring the commitment of capital in excess of $200,000;

###  

### (e)                                  materiallicense or other similar agreement related to the Business (other than(i) governmental permits or licenses used in connection with the operationof the Business and (ii) off-the-shelf software licenses) not alreadydisclosed pursuant to Section 3.7;

###  

### (f)                                    agency,sales representation, distribution or other similar agreement related to theBusiness under which the Seller Group paid sales fees or commissions in excessof $200,000 for the 12 months ended November 29, 2002 (each, a “**Distribution Agreement**”);

###  

### (g)                                 agreementfor the purchase of supplies or materials related to the Business other than inthe ordinary course of business providing for annual payments in excess of$200,000;

###  

### (h)                                 agreementfor the sale of goods or services related to the Business other than in theordinary course of business providing for annual payments in excess of$200,000;

###  

### (i)                                     agreement(non-compete or otherwise) or commitment that is binding upon any member of theSeller Group or any of its officers, directors or employees which has or mayhave the effect of prohibiting or impairing any material business practice, anyacquisition of material property (tangible or intangible) or the conduct of theBusiness as presently conducted by Seller Group or, to the Knowledge of Seller,by Buyer;

###  

### (j)                                     agreementunder which any member of the Seller Group or, in each case, its officer,director, or employee is restricted from selling, licensing or otherwisedistributing any Products or services related to the Products to, customers orpotential customers or any class of customers in any geographic area, duringany period of time or in any segment of the market;

###  

### (k)                                  anyagreement included in the Assets which is not terminable without penalty onthree (3) months’ or fewer days’ notice, providing for payments individually orin the aggregate in excess of $200,000;

###  

### (l)                                     otherthan this Agreement, any agreement for the acquisition or disposition of assetsrelated to the Business entered into in the last three (3) years, other than inthe ordinary course of business; and

###  

### (m)                               agreement(except as otherwise set forth in (a) through (l) above), other than in theordinary course of business that is material to the Business.

###  

Except as set forth on Schedule 3.12 of the Disclosure Schedules,all such agreements are valid, binding and enforceable in accordance with theirterms and Seller Group is not in default under any of the aforesaid agreements(to the extent any such default could reasonably be expected to have a materialeffect on the Seller Groups’ rights, obligations or remedies pursuant to suchagreement), and, to the Knowledge of Seller, no other party is in default underany of the aforesaid agreements.  SellerGroup has provided Buyer with access to true and complete copies of eachagreement, contract and commitment identified on Schedule 3.12 of theDisclosure Schedules that is not subject to a confidentiality agreementlimiting its disclosure.

 

## ***Section3.13***                            Taxes

## *** ***

Except as set forth on Schedule 3.13:

 

### (a)                                  Themembers of the Seller Group have duly filed all Tax Returns related to theBusiness that are required to be filed and have duly paid or caused to be dulypaid in full or made provision in accordance

###  

20

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### withGAAP (or there has been paid or provision has been made on their behalf) forthe payment of all Taxes (as hereinafter defined) related to the Business thatare owed (whether or not shown on any Tax Returns) for all periods or portionsthereof ending on or prior to the Closing Date.  All such Tax Returns are correct and complete in all materialrespects and accurately reflect all liability for Taxes for the periods coveredthereby.

###  

### (b)                                 Thereare no Liens for Taxes on the Assets or the Business other than PermittedEncumbrances.  To the Knowledge ofSeller, there is no basis for the assertion of any claim relating to orattributable to the Taxes which, if adversely determined, would result in anylien upon any of the Assets or the Business.

###  

### (c)                                  Sincethe date of the Reference Balance Sheet, the members of the Seller Group havenot made any change in accounting methods, received a ruling from any taxingauthority or signed an agreement with respect thereto or signed any closingagreement with respect to any Taxes that are related to the Business for anyperiod ending on or before the Closing that could have any effect upon Buyer,the Assets or the Business after the Closing.

###  

### (d)                                 Themembers of the Seller Group have complied in all material respects with allapplicable Laws, rules and regulations relating to the payment and withholdingof Taxes related to the Business within the time and the manner prescribed byLaw, and have withheld and paid over to the proper taxing authorities allamounts required to be so withheld and paid over under applicable Laws.

###  

### (e)                                  Nofederal, state, local or foreign audits, examinations, investigations or otheradministrative proceedings or court proceedings are presently pending withregard to any Taxes or Tax Returns of the members of the Seller Group that arerelated to the Business.

###  

### (f)                                    Alldeficiencies for Tax related to the Business that have been claimed, proposedor asserted have been fully paid or finally settled, and no issue has beenraised in any examination by any taxing authority that, by application ofsimilar principles, could reasonably be expected to result in the proposal orassertion of such a Tax deficiency for another year not so examined and haveany effect upon Buyer, the Assets or the Business after the Closing.

###  

### (g)                                 Thereare no outstanding requests, agreements, consents or waivers to extend thestatutory period of limitations applicable to the assessment of any Taxes ordeficiencies for Taxes related to the Business against any member of the SellerGroup.

###  

### (h)                                 Otherthan any Tax Returns that have not yet been required to be filed (taking intoaccount all proper extensions), the Seller Group has made available to Buyertrue, correct and complete copies of all Tax Returns or portions thereofrelated to the Business.

###  

### (i)                                     Schedule 3.13(i)of the Disclosure Schedules sets forth all material elections with respect toTaxes related to the Business made by each member of the Seller Group to theextent such elections would be binding upon the Buyer after the Closing.

###  

### (j)                                     Nomember of the Seller Group has received written notice of any claim made by anauthority in a jurisdiction where such member of the Seller Group does not fileTax Returns, that the Seller Group is or may be subject to taxation by thatjurisdiction in respect of the Assets or the Business.

###  

### (k)                                  “**Tax**” or, collectively, “**Taxes**,”shall mean (i) any and all federal, state, local and foreign taxes,assessments and other governmental charges, duties, impositions andliabilities, including taxes based upon or measured by gross receipts, income,profits, sales, use and occupation, and value added, ad valorem,

###  

### 21

### 

###  

### transfer,franchise, withholding, payroll, recapture, employment, excise and propertytaxes, together with all interest, penalties and additions imposed with respectto such amounts; (ii) any liability for the payment of any amounts of thetype described in clause (i) as a result of being or ceasing to be amember of an affiliated, consolidated, combined or unitary group for any period(including, without limitation, any liability under Treas. Reg.Section 1.1502-6 or any comparable provision of applicable Law); and(iii) any liability for the payment of any amounts of the type describedin clause (i) or (ii) as a result of any express or impliedobligation to indemnify any other person or as a result of any obligationsunder any agreements or arrangements with any other person with respect to suchamounts and including any liability for taxes of a predecessor entity.

###  

### (l)                                     “**Tax Return**” shall mean any report, return(including any information return), statement or other document with respect toTaxes including, without limitation, any amendments thereto.

###  

## ***Section3.14***                            EmployeeBenefit Plans; ERISA; Employees

## *** ***

### (a)                                  Withthe exception of the definition of “Affiliate” set forth inSection 3.14(a)(i) below (which definition shall apply only to thisSection 3.14) for purposes of this Agreement, the following terms shallhave the meanings set forth below:

###  

#### (i)                                     “**Affiliate**” shall mean any other person orentity under common control with the Seller within the meaning ofSection 414(b), (c), (m) or (o) of the Code and the regulations issuedthereunder;

####  

#### (ii)                                  “**COBRA**” shall mean the Consolidated OmnibusBudget Reconciliation Act of 1985, as amended;

####  

#### (iii)                               “**Code**” shall mean the Internal Revenue Codeof 1986, as amended;

####  

#### (iv)                              “**Employee**” shall mean any current or formeror retired employee, consultant or director of the Seller or any Affiliate;

####  

#### (v)                                 “**EmploymentAgreement**” shall mean each management, employment, severance,consulting, relocation, repatriation, expatriation, visas, work permit or otheragreement, contract or understanding between the Seller Group and any AffectedEmployee;

####  

#### (vi)                              “**ERISA**” shall mean the Employee RetirementIncome Security Act of 1974, as amended;

####  

#### (vii)                           “**FMLA**” shall mean the Family Medical Leave Act of 1993, asamended;

####  

#### (viii)                        “**International Employee Plan**”shall mean each Seller Employee Plan that has been adopted or maintained by theSeller or any Affiliate, whether informally or formally, or with respect towhich the Seller or any Affiliate will or may have any liability**,**for the benefit of Employees who perform services outside the United States;

####  

#### (ix)                                “**IRS**”shall mean the Internal Revenue Service;

####  

#### (x)                                   “**Pension****Plan**” shall mean each SellerEmployee Plan which is an “employee pension benefit plan,” within the meaningof Section 3(2) of ERISA;

####  

#### 22

#### 

####  

#### (xi)                                “**Qualified****Beneficiary**” shall mean anindividual that is identified in Section 4980B(g)(1) of the Code; and

####  

#### (xii)                             “**Seller Employee Plan**” shallmean any plan, program, policy, practice, contract, agreement or otherarrangement providing for compensation, severance, termination pay, deferredcompensation, performance awards, stock or stock-related awards, fringebenefits or other employee benefits or remuneration of any kind, whetherwritten or unwritten or otherwise, funded or unfunded, including withoutlimitation, each “employee benefit plan,” within the meaning ofSection 3(3) of ERISA which is or has been maintained, contributed to, orrequired to be contributed to, by the Seller or any Affiliate for the benefitof any Affected Employee.

####  

### (b)                                 Schedule 3.14(b)of the Disclosure Schedules (i) contains an accurate and complete list ofeach Seller Employee Plan, International Employee Plan and Employment Agreementrelated to the Business or any current Business Employee.  Schedule 3.14(b) of the DisclosureSchedules contains a complete and accurate list of all the names of the full-timeemployees of the Business (the “**BusinessEmployees**”), each Business Employee’s position and the entity thatemploys such Business Employee.

###  

### (c)                                  Sellerand each of its Affiliates has performed in all material respects allobligations required to be performed by them under, are not in default orviolation of, and have no knowledge of any default or violation by any otherparty to each Seller Employee Plan, and each Seller Employee Plan has beenestablished and maintained in all material respects in accordance with itsterms and in compliance with all applicable Laws, including but not limited toERISA or the Code.

###  

### (d)                                 Neitherthe Seller nor any of its Affiliates has ever maintained, established,sponsored, participated in, contributed to, or has been required to contributeto any Pension Plan that is subject to Title IV of ERISA orSection 412 or 413 of the Code related to the Business or Business Employees.

###  

### (e)                                  NoSeller Employee Plan provides, or reflects or represents any liability toprovide retiree benefits (including health, life insurance or otherwise) to anyperson for any reason, except as may be required by COBRA or other applicablestatute, and no member of the Seller Group has represented, promised orcontracted (whether in oral or written form) to any Eligible Employee (eitherindividually or to Business Employees as a group) that such Employee(s) wouldbe provided with retiree health, except to the extent required by statute.

###  

### (f)                                    Neitherthe Seller nor any of its Affiliates has, prior to the Closing Date and in anymaterial respect, violated any of the health care continuation requirements ofCOBRA, the requirements of FMLA, the requirements of the Health InsurancePortability and Accountability Act of 1996, the requirements of the Women’sHealth and Cancer Rights Act of 1998, the requirements of the Newborns’ andMothers’ Health Protection Act of 1996, or any amendment to each such act, orany similar provisions of state Law applicable to Eligible Employees.

###  

### (g)                                 Eachmember of the Seller Group (i) is in compliance in all material respectswith all applicable Law respecting employment, employment practices, terms andconditions of employment and wages and hours, in each case, with respect toEligible Employees, (ii) has withheld and reported all amounts required byapplicable Law or by contract to be withheld and reported with respect towages, salaries and other payments to Eligible Employees, (iii) is notliable for any arrears of wages or any taxes or any penalty for failure tocomply with any of the foregoing, and (iv) is not liable for any paymentto any trust or other fund governed by or maintained by or on behalf of anygovernmental authority, with respect to unemployment compensation benefits,social security or other benefits or obligations for Eligible Employees (otherthan routine payments to be made in the normal course of business andconsistent with past practice).

###  

23

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### Thereare no pending, or to the Knowledge of Seller, threatened claims or actionsagainst any member of the Seller Group under any worker’s compensation policyor long-term disability policy, or similar policies in foreign jurisdictions.

###  

### (h)                                 Nowork stoppage or labor strike by the Eligible Employees is pending, or, to theKnowledge of Seller, threatened.  To theKnowledge of Seller there are no activities or proceedings of any labor unionto organize any Eligible Employees. Except as set forth on Schedule 3.14(h) of the DisclosureSchedules, there are no actions, suits, claims, labor disputes or grievancespending, or, to the Knowledge of Seller, threatened relating to any labor,safety or discrimination matters involving any Eligible Employee, including,without limitation, charges of unfair labor practices or discriminationcomplaints, which, if adversely determined, would, individually or in theaggregate, result in any material liability to the Seller Group.  The Seller Group has not engaged in anyunfair labor practices within the meaning of the National Labor Relations Actwith respect to Eligible Employees.  Nomember of the Seller Group is presently, nor has any such member been in thepast, a party to, or bound by, any collective bargaining agreement or unioncontract with respect to Eligible Employees and no collective bargainingagreement is being negotiated by any member of the Seller Group with respect toEligible Employees.

###  

### (i)                                     Nomember of the Seller Group is, nor has any such member ever had the obligationto, maintain, establish, sponsor, participate in, or contribute to any SellerEmployee Plan, whether a Seller Employee Plan by adoption of a member of theSeller Group or by imposition or application pursuant to applicable Law, withrespect to which any member of the Seller Group will or may have any liabilityor Employment Liabilities for the benefit of Eligible Employees who performservices outside the United States.

###  

## ***Section3.15***                            EnvironmentalMatters

## *** ***

### (a)                                  Forpurposes of this Agreement, the following terms shall have the meaningsascribed to them below:

###  

#### (i)                                     “**Business Facility**” is any Business RealProperty and any other property including the land, the improvements thereon,the groundwater thereunder and the surface water thereon, that is or at anytime has been owned, operated, occupied, controlled or leased by any member ofthe Seller Group in connection with the operation of the Business.

####  

#### (ii)                                  “**Disposal Site**” is a landfill, disposalsite, disposal agent, waste hauler or recycler of Hazardous Substances, or anyreal property other than a Business Facility receiving Hazardous Substancesused or generated by the Business.

####  

#### (iii)                               “**Environmental Laws**” are all applicableLaws, directives, guidance having the force of Laws, or orders promulgated byany governmental authority which prohibit, regulate or control any HazardousSubstance or any Hazardous Substance Activity, including, without limitation,the Comprehensive Environmental Response, Compensation, and Liability Act of1980, the Resource Recovery and Conservation Act of 1976, the Federal WaterPollution Control Act, the Clean Air Act, the Hazardous SubstancesTransportation Act, the Occupational Safety and Health Act, the ToxicSubstances Control Act and the Clean Water Act, all as amended at any time.

####  

#### (iv)                              “**Environmental Permit**” is any approval,permit, registration, certification, license, clearance or consent required tobe obtained from any private person or any governmental authority with respectto a Hazardous Substances Activity which is or was conducted by any member ofthe Seller Group in connection with the Business.

####  

#### 24

#### 

####  

#### (v)                                 “**Hazardous Substance**” is any material orsubstance, whether gaseous, liquid, solid or in other form that has beendesignated by any governmental authority to be radioactive, toxic, hazardous orotherwise a danger to health, reproduction or the environment.

####  

#### (vi)                              “**Hazardous Substances Activity**” is thetransportation, transfer, recycling, storage, use, treatment, manufacture,removal, remediation, release, exposure of others to, sale, or distribution ofany Hazardous Substances or any product or waste containing a HazardousSubstance, or regulated manufacture of a product with ozone depletingsubstances, in each case relating to the Business.

####  

### (b)                                 Exceptas set forth on Schedule 3.15(b) of the Disclosure Schedule:

###  

#### (i)                                     Exceptin compliance with Environmental Laws, no Hazardous Substances are present asof the Closing on any Business Facility currently owned, operated, occupied,controlled or leased by any member of the Seller Group or were present on anyother Business Facility at the time it ceased to be owned, operated, occupied,controlled or leased by any member of the Seller Group.  To the Knowledge of Seller, there are nounderground storage tanks, asbestos which is friable (other than asbestos thathas been encapsulated in accordance with Environmental Laws) or likely tobecome friable or PCBs present on any Business Facility currently owned,operated, occupied, controlled or leased by any member of the Seller Group.

####  

#### (ii)                                  Eachmember of the Seller Group has conducted all Hazardous Substances Activitiesrelated to the Business in compliance in all material respects with allapplicable Environmental Laws.  To theKnowledge of Seller, the Hazardous Substances Activities of the members of theSeller Group prior to the Closing have not resulted in the exposure of anyperson to a Hazardous Substance in a manner which has caused or could reasonablybe expected to cause an adverse health effect to any such person.

####  

#### (iii)                               No Environmental Permitsare required for the operation of the Business as presently conducted.

####  

#### (iv)                              Nomember of the Seller Group has received written notice of any action, proceeding,revocation proceeding, amendment procedure, writ, injunction or claim ispending, or threatened, concerning or relating to any Hazardous SubstancesActivity of any member of the Seller Group related to the Business.

####  

#### (v)                                 Nomember of the Seller Group has received written notice of any action,proceeding, liability or claim exists or is threatened against any DisposalSite or against any member of the Seller Group with respect to any transfer orrelease of Hazardous Substances related to the Business to a Disposal Sitewhich could reasonably be expected to subject any member of the Seller Group toliability.

####  

#### (vi)                              Tothe Knowledge of Seller, there is no fact or circumstance that could result inany environmental liability that could reasonably be expected to result in aMaterial Adverse Effect on the Business.

####  

#### (vii)                           Each member of the SellerGroup has delivered to Buyer or made available for inspection by Buyer allenvironmental audits and environmental assessments conducted within the lastfive years of any Business Facility conducted at the request of, or otherwisein the possession of any member of the Seller Group.  Each member of the Seller Group has complied with allenvironmental disclosure obligations imposed by applicable Law with respect tothis transaction.

####  

#### 25

#### 

####  

## ***Section3.16***                            Insurance

## *** ***

### (a)                                  Allinsurance policies related to the Business currently maintained by any memberof the Seller Group on which any member of the Seller Group is a named insuredor beneficiary, as are current, are in full force and effect, all premiums duethereon have been paid, and each member of the Seller Group has complied in allmaterial respects with the provisions of such policies, and all such policieseither specifically include Seller or one of the other members of the SellerGroup as a named insured or include omnibus named insured language whichgenerally includes Seller or one of the other members of the Seller Group.

###  

### (b)                                 NoProceeding is pending or, to the Knowledge of Seller, threatened, to revoke,cancel or limit such policies and no notice of cancellation of any policiesrelated to the Business has been received by any member of the Seller Group.

###  

### (c)                                  Exceptas set forth on Schedule 3.16(c) of the Disclosure Schedules, the membersof the Seller Group are in compliance with all warranties contained in allinsurance policies related to the Business.

###  

### (d)                                 Nomember of the Seller Group has taken or failed to take any action that wouldenable the insurers under policies related to the Business to avoid liabilityfor claims arising out of occurrences prior to the Closing Date.

###  

## ***Section3.17***                            LaborMatters

## *** ***

Except as set forth on Schedule 3.17 of theDisclosure Schedules, (i) no member of the Seller Group is a party to anylabor agreement with any labor organization, group or association with respectto Eligible Employees; (ii) there is no labor strike, dispute, slowdown,stoppage or lockout actually pending (for which notice has been provided), orto the Knowledge of Seller, threatened against the Business; (iii) thereis no unfair labor practice charge or complaint against any member of theSeller Group related to the Business pending (for which notice has beenprovided) or, to the Knowledge of Seller, threatened before the National LaborRelations Board or any similar foreign agency; (iv) there is no pendinggrievance nor any pending arbitration proceeding arising out of or under anycollective bargaining agreements related to the Business; (v) no materialcharges with respect to or relating to any member of the Seller Group arepending before the Equal Employment Opportunity Commission or any state, localor foreign agency responsible for the prevention of unlawful employmentpractices; and (vi) no member of the Seller Group has received notice ofthe intent of any federal, state or foreign governmental authority responsiblefor the enforcement of labor or employment laws to conduct an investigationwith respect to or related to the Business and no such investigation is inprogress. A copy of the material written personnel policies of the Businesscurrently in effect has been delivered to Buyer.

 

## ***Section3.18***                            Suppliers

## *** ***

Schedule 3.18 of the Disclosure Schedules setsforth a list of all the Business’ 20 most significant suppliers (in terms ofanticipated significance for manufacturing in the next 12 months) for Productsor any component or service necessary or significant for the Products and allsuppliers who are the only available source for Products or any component orservice necessary or significant for the Products (collectively, the “**KeySuppliers**”), showingthe approximate total purchases by or on behalf of the Business from each suchKey Supplier during such period and all open commitments to such Key Suppliers asof the date hereof.  Since November 29,2002, no Key Supplier has declined to renew any contract with any member of theSeller Group related to the Business or notified any member of the Seller Groupin writing or, to the Knowledge of the Seller, orally that such Key Supplierwill no longer provide any component or service necessary for the Products orfor which such Key Supplier is the only available source for Products or anycomponent or

 

26

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service necessary for the Products. To the Knowledge of Seller, since November 29, 2002, no Key Supplier has(i) been abnormally late in the delivery of any component or servicenecessary for the Products or for which such Key Supplier is the only availablesource for Products or any component or service necessary for the Products,(ii) suffered a material adverse change in its financial condition orbusiness operations likely to affect its ability to continue to provide theservices or products it supplies for the Business, including the consummationor contemplation of any bankruptcy filing, or (iii) suffered anythreatened or actual material labor dispute that is ongoing as of the date ofthis Agreement and is likely to impact its ability to deliver products or servicesfor the Business.

 

## ***Section3.19***                            Customers

## *** ***

Schedule 3.19 of the Disclosure Schedules setsforth a true and complete list of the customers accounting for at least 75% ofthe Business’ revenue during calendar year 2002 (the “**Significant Customers**”), showing theapproximate total sales by or on behalf of the Business to each such customerduring such period.  Since November 29,2002, no Significant Customer has declined to renew any contract with anymember of the Seller Group in connection with the Business or notified anymember of the Seller Group in writing or, to the Knowledge of the Seller,orally that such Significant Customer will no longer purchase Products orservices relating to Products from the Seller Group.  To the Knowledge of Seller, since November 29, 2002, noSignificant Customer has (i) been abnormally late in making any payments to theSeller Group, (ii) suffered a material adverse change in its financialcondition or business operations likely to affect its ability to continue to purchaseProducts or services from the Seller Group, including the consummation orcontemplation of any bankruptcy filing, or (iii) suffered any threatened oractual material labor dispute that is ongoing as of the date of this Agreementand is likely to impact its ability to purchase Products or services from theSeller Group.

 

## ***Section3.20***                            Assetsand Permits Necessary to the Business; Equipment

## *** ***

### (a)                                  Exceptas set forth on Schedule 3.20(a) of the Disclosure Schedules, followingthe Closing, the Assets will represent all assets reasonably necessary to carryon the Business in substantially the same manner as presently conducted.

###  

### (b)                                 Schedule 3.20(b)of the Disclosure Schedules lists all material Permits.  Except as set forth onSchedule 3.20(b), all Permits are in full force and effect and aretransferable to Buyer (except for any Permit the failure of which to be in afull force and effect or to be transferable to Buyer would not prevent Buyerfrom operating the Business after the Closing in the same manner as operated bySeller prior to the Closing).

###  

### (c)                                  Schedule 3.20(c)of the Disclosure Schedules lists all items of equipment (the “**Equipment**”) owned or leased by any member ofthe Seller Group used primarily in the Business or reflected in the ReferenceBalance Sheet (except for Equipment which individually has a net book value notexceeding $5,000). The Reference Balance Sheet includes sufficient personalcomputers for each Affected Employee that has a personal computer as of thedate hereof for use related to the Business to have a personal computer for userelated to the Business following the Closing.

###  

## ***Section3.21***                            Transactionswith Affiliates

## *** ***

Except as set forth on Schedule 3.21 of theDisclosure Schedules, neither Seller nor any of its subsidiaries is a KeySupplier, Significant Customer or distributor under any DistributionAgreement.  There are no Contracts withany member of the Seller Group that survive the Closing.

 

27

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## ***Section3.22***                            CertainFees

## *** ***

Except for any broker, finder or investment banker,whose fee and commission is the sole responsibility of Seller Group, there isno broker, finder or investment banker entitled to any brokerage, finder’s orother fee or commission, or to the reimbursement of any of its expenses, inconnection with the transactions contemplated hereby based upon arrangementsmade by Seller Group or on Seller Group’s behalf.

 

# **ARTICLE IV**

# ** **

# **REPRESENTATIONSAND WARRANTIES OF BUYER**

# ** **

Buyer hereby represents and warrants to Seller Group asfollows:

 

## ***Section4.1***                                   Organization

## *** ***

Buyer is a corporation duly organized, validlyexisting and in good standing under the laws of its state of incorporation.

 

## ***Section4.2***                                   Authorization

## *** ***

Buyer has the corporate power and authority to executeand deliver this Agreement and the Ancillary Agreements and consummate thetransactions contemplated hereby and thereby. The execution and delivery of this Agreement and the AncillaryAgreements by Buyer and the consummation of the transactions contemplatedhereby has been approved by the Board of Directors of Buyer, and no othercorporate proceedings on the part of Buyer are necessary to authorize theexecution, delivery and performance of this Agreement and the AncillaryAgreements or the consummation of the transactions contemplated hereby orthereby.  This Agreement and theAncillary Agreements have been duly executed and delivered by Buyer andconstitute, and when executed and delivered, other agreements, documents andinstruments to be executed and delivered by Buyer, as applicable, pursuanthereto will constitute, a valid and binding agreement of Buyer, enforceableagainst Buyer in accordance with their respective terms.

 

## ***Section4.3***                                   Consentsand Approvals; No Violations

## *** ***

Except for applicable requirements of the HSR Act orantitrust or other competition Law of other jurisdictions, neither theexecution, delivery or performance of this Agreement nor the consummation byBuyer of the transactions contemplated hereby will (a) conflict with orresult in any breach or violation of any provision of the articles ofassociation of Buyer or the certificate of incorporation or bylaws of Buyer;(b) require any filing or registration with, or notice or declaration to,or the obtaining of any permit, license, authorization, consent or approval of,any governmental or regulatory authority whether within or outside the UnitedStates; (c) violate, conflict with or result in a default (or any eventwhich, with notice or lapse of time or both, would constitute a default) under,or result in any termination, cancellation or acceleration, or give rise to anysuch right of termination, cancellation or acceleration under, any of theterms, conditions or provisions of any note, mortgage, other evidence ofindebtedness, guarantee, license, agreement, lease or other instrument orobligation to which Buyer is a party or by which Buyer or any of its assets issubject or by which any of them may be bound; (d) violate any order,injunction, decree, statute, rule or regulation applicable to Buyer; orexcluding from the foregoing clauses (b), (c) and (d) such requirements,conflicts, defaults, rights or violations that would not adversely affect theability of Buyer to consummate the transactions contemplated by this Agreementor that become applicable as a result of any acts or omissions by, or thestatus of or any facts pertaining to, the Business or Seller Group.

 

28

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## ***Section4.4***                                   CertainFees

## *** ***

Except for any broker, finder or investment banker,whose fee and commission is the sole responsibility of Buyer, there is nobroker, finder or investment banker entitled to any brokerage, finder’s orother fee or commission, or to the reimbursement of any of its expenses, inconnection with the transactions contemplated hereby based upon arrangementsmade by Buyer or on Buyer’s behalf.

 

## ***Section4.5***                                   Funding

## *** ***

The Buyer has adequate funds on hand and will haveadequate funds at Closing to fund the entire Purchase Price.

 

# **ARTICLE V**

# ** **

# **COVENANTS**

# ** **

## ***Section5.1***                                   Conductof the Business

## *** ***

Seller agrees that, during the period from the date ofthis Agreement to the Closing Date, except (i) as otherwise expresslycontemplated by this Agreement or the transactions contemplated hereby, or(ii) as consented to by Buyer in writing, it shall (and Seller shall causethe other members of the Seller Group to):

 

### (a)                                  conductthe Business in the ordinary course consistent with past practice; usecommercially reasonable efforts to preserve intact the Business’ organization;use commercially reasonable efforts to keep available the services of theBusiness’ current officers and employees, and preserve relationships with thosepersons having business dealings with the Business to the end that its goodwilland ongoing business shall be unimpaired at the time of the Closing, includingthe payment of any necessary registration, maintenance and renewal fees dueprior to the Closing Date in connection with the Registered IntellectualProperty included within the Transferred Intellectual Property; and

###  

### (b)                                 not:

###  

#### (i)                                     sell,assign, sublease, license, transfer, convey or otherwise dispose of any of theAssets other than in connection with sales of Products to customers in theordinary course of business;

####  

#### (ii)                                  makeany loans, advances (other than advances in the ordinary course of business) orcapital contributions to, or investments in, any other person on behalf of theBusiness;

####  

#### (iii)                               terminate, modify,transfer or amend any of the Permits (including Environmental Permits) orContracts or except in the ordinary course of business;

####  

#### (iv)                              enterinto any new agreement related to the Business other than renewals of existingagreements or otherwise in the ordinary course of business;

####  

#### (v)                                 increasein any manner the compensation (cash, equity or otherwise) of any of theEligible Employees, except for such increases as are granted in the ordinarycourse of business consistent with past practice in accordance with the termsof any employment contract or collective bargaining agreement as currently ineffect;

####  

#### 29

#### 

####  

#### (vi)                              grantany severance or termination pay (cash, equity or otherwise) to any EligibleEmployee, except pursuant to written agreements outstanding, or policiesexisting, on the date hereof or pay any special bonus or remuneration (cash,equity or otherwise) to any Eligible Employee;

####  

#### (vii)                           adopt, grant, extend orincrease the rate or terms of any bonus, insurance pension or other employeebenefit plan, payment or arrangement made to, for or with any EligibleEmployee, except increases required by any applicable Law;

####  

#### (viii)                        terminate the employment of anyEligible Employee, except for cause, provided Seller provides notice toBuyer prior to any such termination;

####  

#### (ix)                                makeor change any material Tax election or method or practice of Tax accounting,settle or compromise any claim for Taxes, or consent to the extension or waiverof the statutory period of limitations applicable to any claim for Taxes, ineach case, related to the Business that could have any effect upon Buyer, theAssets or the Business after the Closing;

####  

#### (x)                                   licenseany intellectual property rights of the Business to or from any third partypursuant to an arrangement other than in the ordinary course of businessconsistent with past practice;

####  

#### (xi)                                makeor authorize any capital expenditures on behalf of the Business other than inaccordance with the Business’ annual plan or other than capital expendituresnot exceeding $50,000 individually or $200,000 in the aggregate;

####  

#### (xii)                             incur any indebtedness forborrowed money other than from Buyer or any affiliate of Buyer, issue any debtsecurities or assume, guarantee or endorse the obligations of any other personsor subject any of the Assets to any Liens;

####  

#### (xiii)                          cancel or compromise anymaterial debt or claim or waive or release any material rights of the Business;or

####  

#### (xiv)                         enter into any agreement onbehalf of the Business to do any of the foregoing.

####  

## ***Section5.2***                                   Accessto Information

## *** ***

### (a)                                  Betweenthe date of this Agreement and the Closing Date, Seller Group shall, subject toany restrictions as to confidentiality applicable to Seller Group whether byLaw, agreement or contract, (i) give Buyer and its authorizedrepresentatives reasonable access to all books, records, work papers, personnel,offices and other facilities and properties of the Business and itsaccountants; (ii) permit Buyer and its authorized representatives to makesuch copies and inspections thereof as any of them may reasonably request;(iii) permit Buyer and its authorized representatives to conduct anenvironmental inspection of the Business Real Property (including a“Phase I” site assessment which may also include interior wipe sampling),provided that Buyer and its representatives shall have no right to undertakeany soil or groundwater investigation; and (iv) cause the officers ofSeller Group to furnish Buyer and its authorized representatives with suchfinancial and operating data and other information with respect to the businessand properties of the Business as any of them may from time to time reasonablyrequest; provided, however, that any such access shall beconducted during normal business hours under the supervision of Seller Group’spersonnel and in such a manner as to maintain the confidentiality of thisAgreement and the transactions contemplated hereby and not interfereunreasonably with the normal operations of the Business, except as otherwisecontemplated by this Agreement.

###  

### 30

### 

###  

### (b)                                 Fromand after the date of this Agreement and continuing until the Buyer SurvivalDate, all Seller Group Confidential Information (as hereinafter defined) shall(i) be held by Buyer with the same degree of skill and care that it wouldexercise in similar circumstances in carrying out its own business to preventthe disclosure or accessibility to others of such information and(ii) shall not be revealed, reported, published, disclosed or transferredto any person or entity (other than the Seller Group).  For purposes of this Agreement, “SellerGroup Confidential Information” means any non-public information related to theBusiness furnished or provided by Seller Group or its affiliates to Buyer; provided,however, that Seller Group Confidential Information shall not be deemedto include (A) information related to the Business that was already publiclyknown and in the public domain prior to the time of its initial disclosure toBuyer or (B) any information related to the Seller Group that is or becomesavailable to Buyer or its affiliates after the Closing from a source that Buyerreasonably believes not to be under an obligation of confidentiality withrespect to such information; provided, further, Buyer may reveal,report, disclose or transfer any Seller Group Confidential Information pursuantto a subpoena or order issued by a court of competent jurisdiction or by ajudicial or administrative or legislative bodies or committee.  For purposes of this Agreement, the “BuyerSurvival Date” means (x) the Closing Date in respect of all Seller GroupConfidential Information relating to Transferred Intellectual Property; (y) two(2) years following the Closing Date in respect of all other Seller GroupConfidential Information other than Seller Group Confidential Informationrelating to Intellectual Property; and (z) five (5) years following theClosing Date for Seller Group Confidential Information relating to IntellectualProperty other than Transferred Intellectual Property; or in any case, the dateon which such Seller Group Confidential Information becomes publicly knownthrough no action or inaction of Buyer or any of its Affiliates.

###  

### (c)                                  Onthe Closing Date, Seller Group shall assign to Buyer all of its rights underany confidentiality agreement entered into by Seller Group with any person inconnection with a potential sale of the Business (a “**Confidentiality Agreement**”), to the extent such ConfidentialityAgreement is assignable pursuant to its terms.

###  

## ***Section5.3***                                   Consentsand Approvals

## *** ***

### (a)                                  Assoon as practicable after the execution of this Agreement, each of Seller andBuyer (or each of their ultimate parent entities as defined in the rulespromulgated under the HSR Act) will file, or cause to be filed, with theFederal Trade Commission and the Antitrust Division of the United States Departmentof Justice pursuant to the HSR Act, the notification and documentary materialrequired in connection with the consummation of the transactions contemplatedby this Agreement.  In addition, each ofSeller Group and Buyer shall promptly take all action necessary to make anyfilings reasonably determined in good faith to be required by the Buyer underany other antitrust or competition Law.

###  

### (b)                                 SellerGroup and Buyer shall promptly file any additional information requested assoon as practicable after receipt of any request for additionalinformation.  Buyer and Seller Groupshall use their commercially reasonable efforts to obtain early termination ofthe applicable waiting period, to the extent required, with the applicableregulatory authorities, including under the HSR Act.  The parties hereto will coordinate and cooperate with one anotherin exchanging such information and providing such reasonable assistance as maybe requested in connection with such filings.

###  

### (c)                                  Sellershall obtain, prior to Closing, all consents required in conjunction with theReal Estate Agreements at no cost to Buyer or shall deliver the benefit of theReal Estate Agreements to Buyer at the Closing and remain responsible for suchconsents (and any risks associated with the failure to obtain such consents)post-Closing (and shall indemnify Buyer therefrom).

###  

### 31

### 

###  

## ***Section5.4***                                   ReasonableEfforts

## *** ***

### (a)                                  Eachmember of the Seller Group and Buyer shall cooperate, and use its reasonable commercialefforts to take, or cause to be taken, all actions, and to do, or cause to bedone, all things necessary, proper or advisable under applicable Law toconsummate the transactions contemplated by this Agreement.

###  

### (b)                                 Assoon as practicable after the date hereof, Seller shall, at its expense (exceptas set forth below), cause to be prepared all financial information of theBusiness required by the United States Securities and Exchange Commission (the“**SEC**”) to be filed by Buyerfollowing the Closing as part of a Current Report on Form 8-K (the “**Form 8-K**”) (including the preparation ofaudited financial statements, if necessary) and the pro forma financialinformation of the Business with respect to the transactions contemplated bythis Agreement (the “**Audited and OtherRequired Financial Information**”). The cost of preparation of any required audited financial statementsshall be borne by the Seller; provided, however*,* that to the extent the cost ofpreparation of such audited financial statements exceeds $500,000, Seller andBuyer shall split any such excess costs up to $1,500,000, such that Buyer shallbe responsible for up to a maximum of $500,000 in costs associated with suchaudit.  Any costs beyond $1,500,000shall be borne by Seller.  Seller herebyrepresents that all the information necessary to permit Buyer to comply withits obligations pursuant to Form 8-K will be made available in a timelymanner to enable Buyer to satisfy its public reporting obligations underapplicable law.

###  

### (c)                                  Buyerand Seller shall cooperate and use good faith efforts to promptly obtain awaiver from the SEC limiting the time period and scope of the audit set forthin subsection (b) above. Buyer and Seller shall agree upon the form of requestto be submitted to the SEC.

###  

### (d)                                 Buyerand its advisors will apprise Seller of any concerns regarding the conduct,scope or outcome of the audit required pursuant to subsection (b) above thatthey have as of the date hereof within five business days of the date hereof.

###  

## ***Section5.5***                                   PublicAnnouncements

## *** ***

Following the execution hereof, each of Buyer andSeller will consult with each other regarding the language of and issue a pressrelease or press releases disclosing such action.  Thereafter, prior to the Closing, except as otherwise agreed toby the parties, no party shall issue any report, statement or press release orotherwise make any public statements with respect to this Agreement and thetransactions contemplated hereby, except (i) to the extent reasonablyrequired in connection with the operation of the Business or (ii) as inthe reasonable judgment of Buyer or Seller may be required by Law or inconnection with the obligations of a publicly-held company, in which caseSeller and Buyer will use their commercially reasonable efforts to reach mutualagreement as to the language of any such report, statement or pressrelease.  Each party shall give theother party a reasonable opportunity to review and comment on any proposedpress release before issuing any such press release.

 

## ***Section5.6***                                   Covenantto Satisfy Conditions

## *** ***

Seller Group will use its reasonable commercialefforts to ensure that the conditions set forth in Article VI hereof aresatisfied, insofar as such matters are within the control of Seller Group, andBuyer will use its reasonable commercial efforts to ensure that the conditionsset forth in Article VI hereof are satisfied, insofar as such matters arewithin the control of either of them.

 

32

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## ***Section5.7***                                   SupplementalDisclosure

## *** ***

Seller Group, on the one hand, and Buyer, on the otherhand, shall supplement or amend its Disclosure Schedules prior to the ClosingDate as required to make the representations and warranties true andcorrect.  Any such supplemental oramended disclosure will not be deemed to have cured any breach made in thisAgreement and to have been disclosed as of the date of this Agreement forpurposes of Articles VI and VII hereof.

 

## ***Section5.8***                                   TransfersNot Effected as of Closing

## *** ***

Nothing herein shall be deemed to require theconveyance, assignment or transfer of any Asset that by its terms or byoperation of Law cannot be freely conveyed, assigned, transferred orassumed.  To the extent the partieshereto have been unable to obtain any governmental or any third party consentsor approvals required for the transfer of any Asset and to the extent nototherwise prohibited by the terms of any Asset, Seller Group shall continue tobe bound by the terms of such applicable Asset and Buyer shall pay, perform anddischarge fully all of the obligations of Seller Group or any of its affiliatesthereunder from and after the Closing. Seller Group shall, without consideration therefor, promptly pay, assignand remit to Buyer all monies, rights and other consideration received inrespect of such performance, and Buyer shall promptly pay and/or remit toSeller expenses reasonably incurred by Seller Group related thereto.  Seller Group shall exercise or exploit itsrights in respect of such Assets only as reasonably directed by Buyer and atBuyer’s expense.  Subject to and inaccordance with Section 5.3, for not more than a hundred and eighty (180)days following the Closing Date, the parties hereto shall continue to use theircommercially reasonable efforts to obtain all such consents or approvals thathave not been obtained at the earliest practicable date.  If and when any such consents or approvalsshall be obtained, then Seller Group shall promptly assign its rights andobligations thereunder to Buyer without payment of consideration and Buyershall, without the payment of any consideration therefor, assume such rightsand obligations.  The parties shallexecute such good and sufficient instruments as may be necessary to evidence suchassignment and assumption.  If any suchconsent shall not be obtained, Seller Group shall cooperate with Buyer in anyreasonable arrangement designed to provide for Buyer the benefits intended tobe assigned to Buyer from the Assets, including enforcement at the cost and forthe account of Buyer of any and all rights of Seller Group against the otherparty thereto arising out of the breach or cancellation thereof by such otherparty or otherwise.  If and to theextent such arrangement cannot be made, (i) Seller shall retain any suchAssets, (ii) such Assets shall be deemed to be “**Rejected Assets**,” and (iii) Buyer shall have no obligationpursuant to Section 1.1(c) or otherwise with respect to any AssumedLiabilities or other obligations attributable to any such Rejected Assets.  The provisions of this Section 5.8shall not affect the right of Buyer not to consummate the transactionscontemplated by this Agreement if the conditions to its obligations hereundercontained in Article VI have not been fulfilled.

 

## ***Section5.9***                                   Employmentof Eligible Employees

## *** ***

The Seller Group shall, and shall cause itsrepresentatives to, cooperate with Buyer in connection with Buyer’scommercially reasonable efforts contemplated in Section 2.3 for EligibleEmployees, and, in furtherance thereof, shall permit, and shall cause theirrepresentatives to permit, the representatives of Buyer to meet with EligibleEmployees of the Seller Group and to distribute to such Eligible Employees suchforms and other documents relating to their employment with Buyer as Buyer mayreasonably determine; provided, however, that any such accessshall be conducted in such a manner as not to interfere unreasonably with thenormal operations of the Business.

 

33

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## ***Section5.10***                            Prohibitionon Solicitation and Hiring

## *** ***

During the period prior to the Closing, no member ofthe Seller Group shall hire or retain as an employee or consultant, or offer tohire or retain as an employee or consultant, or solicit the services of, anyEligible Employee for any position unrelated to the Business unless and untilan Eligible Employee has rejected the offer of employment by Buyer.  During the two (2)-year period immediatelyfollowing the Closing Date, no member of the Seller Group shall hire or retainas an employee or consultant, or offer to hire or retain as an employee orconsultant, or solicit the services of, any Affected Employee; provided,however, that nothing in this Section 5.10 shall prevent the SellerGroup after the Closing Date from publishing any general advertisement orsimilar notice in any newspaper or other publication of general circulation andhiring or retaining as a consultant any Affected Employee who responds to suchgeneral advertisement without any solicitation by any member of the SellerGroup or any of its respective directors or officers; provided, further,however, that after the one-year anniversary of the Closing Date, theforegoing restrictions shall not apply with respect to any Affected Employeebeginning 90 days after such Affected Employee’s employment terminates withBuyer.

 

## ***Section5.11***                            NoNegotiation

## *** ***

Seller shall ensure that, during the period prior tothe Closing, neither it nor any member of Seller Group nor any of its or theirrepresentatives, directly or indirectly: (a) solicits or encourages theinitiation of any inquiry, proposal or offer from any person (other than Buyer)relating to any Acquisition Transaction (as defined below); or(b) participates in any discussions or negotiations with, or provides anynon-public information to, any person (other than Buyer) relating to anyproposed Acquisition Transaction. Seller Group shall provide notice to Buyer within two (2) business daysof the receipt of any proposed Acquisition Transaction.  For purposes of this Section 5.11,“Acquisition Transaction” shall mean any transaction involving the sale orother disposition of all or any portion of the Business or Assets (other thanas permitted pursuant to Section 5.1); provided, however,that nothing in this Section 5.11 shall prohibit any transaction,discussions, negotiations or sharing of information (including with respect tothe Assets or the Business) regarding (i) the acquisition of ownership orcontrol of all or any portion of the capital stock or other securities of Seller,(ii) the acquisition of all or substantially all of the assets of Seller,or (iii) any merger, consolidation, business combination, share exchange,reorganization or similar transaction involving Seller as long as in connectionwith any such transaction the buyer or acquiring person agrees in writing to(in the case of an asset transaction), or agrees in writing to cause themembers of the Seller Group so acquired to, comply with their obligationshereunder.

 

## ***Section5.12***                            Confidentiality

## *** ***

From and after the date of this Agreement (includingfrom and after the Closing Date) and continuing until the Seller Survival Date(as hereinafter defined), the Seller Group shall hold all ConfidentialInformation with the same degree of skill and care that it would exercise insimilar circumstances in carrying out its own business to prevent thedisclosure or accessibility to others (including to any entity that controlsSeller Group) of the Confidential Information and agree not to reveal, report,publish, disclose or transfer any Confidential Information to any person orentity (other than Buyer) except prior to Closing in the ordinary course ofbusiness consistent with past practice and further agrees that, except asotherwise permitted under the Intellectual Property License Agreement, Sellerwill not, and it will ensure that none of the other members of the Seller Groupwill, at any time use any Confidential Information that relates exclusively tothe Business or that will be transferred to Buyer pursuant to this Agreementfor any purpose other than for purposes of carrying out the Business prior tothe Closing. For the purposes of this Agreement, “**Confidential Information**” means any non-public informationrelated to the Business or any of the Assets; provided, however,that Confidential Information shall not be deemed to include(i) information related to the Business

 

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that was already publicly known and in the public domain prior to thetime of its initial disclosure to any member of the Seller Group or(ii) information related to the Business that is or becomes available toany member of the Seller Group after the Closing from a source which, to theKnowledge of Seller, is not under an obligation of confidentiality with respectto such information; provided, further, the members of the SellerGroup may reveal, report, publish, disclose or transfer any ConfidentialInformation pursuant to a subpoena or order issued by a court of competentjurisdiction or by a judicial or administrative or legislative body orcommittee. For purposes of this Agreement, the “**Seller Survival Date**” means (x) two (2) yearsfollowing the Closing Date in respect of all Confidential Information otherthan Confidential Information relating to Transferred Intellectual Property;and (y) in respect of Confidential Information relating to IntellectualProperty, five (5) years following the Closing Date, or in either case, thedate on which such Confidential Information becomes publicly known through noaction or inaction of the Seller Group or any of its affiliates. Buyer shallnotify all Affected Employees not to retain, disclose or use improperly anyconfidential information of the Seller Group other than that transferred orlicensed to Buyer hereunder.

 

## ***Section5.13***                            AgreementsRelated to Certain Business Real Property

## *** ***

Buyer and Seller acknowledge that between the datehereof and the Closing Buyer shall, in accordance with Section 2.3(a) hereof,be making offers to certain Business Employees and evaluating the need forcertain of the Business Real Property listed on Exhibit A to the Multiple SiteLicense Agreement. Buyer, no later than thirty (30) days following the datehereof, shall have the right to eliminate any or all of the Business Real Propertieslisted on Exhibit A to the Multiple Site License by written notice toSeller.  Buyer and Seller alsoacknowledge that leases for two properties currently occupied by BusinessEmployees, those located in Tokyo, Japan and Vienna, Virginia listed on Schedule1.1(a)(i)(B) of the Disclosure Schedules, may terminate prior to theClosing.  Buyer and Seller agree tocooperate with respect to the disposition of those Business Real Properties andthe Business Employees located therein, which disposition may include therelocation of such employees to other premises in the immediate vicinity orelsewhere, or the extension of such leases on terms mutually agreeable to Buyerand Seller.

 

## ***Section5.14***                            InsuranceClaims

## *** ***

Following the Closing, and with respect only to Assetsnot transferred at the Closing and Assumed Liabilities, Seller Group will usecommercially reasonable efforts to pursue claims under its insurance policiesrelated to the Business which have been made prior to the Closing or, ifoccurrence type policies, even if made after the Closing, and will remitamounts recovered to Buyer to the extent of Buyer’s interests, if any.  In the event of damage to or destruction ofany property constituting the Assets prior to the Closing, Buyer, with theassistance of Seller Group, at Seller Group’s expense, shall pursue any claimsavailable under Seller Group’s insurance policies and Seller Group will remitamounts recovered to Buyer to the extent of Buyer’s interests, if any.  In addition, in the event that any propertyemployed in the Business is condemned by a governmental authority prior toClosing, Seller Group (effective as of the Closing) shall appoint Buyer, as itsagent, to pursue any claims it may have against such governmental authoritywith respect to such property.

 

## ***Section5.15***                            TaxMatters

## *** ***

### (a)                                  Allocationof Purchase Price.  As soon aspracticable following the Closing, the Closing Cash Purchase Price and thevalue of the Assumed Liabilities, each to the extent properly taken intoaccount under Section 1060 of the Code and the regulations promulgatedthereunder, (the “Section 1060 Purchase Price”) shall be allocated asdetermined jointly by Buyer and Seller among the Assets being sold hereunder(the “**Allocation**”). Such Allocation shall be subject to appropriate adjustment in the eventof an adjustment to the purchase price pursuant to Section 1.7 hereof or ifBuyer successfully asserts a claim for indemnification pursuant toSection 7.2 hereof.  Seller Group andBuyer (i) shall be bound by the Allocation, and any

###  

### 35

### 

###  

### amendmentsthereto, (ii) shall prepare and file all Tax Returns (including, withoutlimitation, Federal Form 8883) and financial statements in a mannerconsistent with the Allocation, and any amendments thereto, and(iii) shall take no position, and shall cause its subsidiaries to take noposition, inconsistent with the Allocation, or any amendment thereto, on anyTax Return, in any proceeding before any taxing authority or otherwise. In theevent that the Allocation, or any amendment thereto, is disputed by any taxingauthority, the party receiving notice of such dispute shall promptly notify andconsult with the other party concerning resolution of such dispute.  If Buyer and Seller are unable to agree uponthe Allocation within sixty (60) days following the Closing Date, each of Buyerand the Seller Group may file IRS Form 8594 and any other Tax Returnsallocating the Section 1060 Purchase Price among the Assets in the mannereach believes appropriate, provided such allocations are reasonable and inaccordance with Section 1060 of the Code and the regulations thereunder.

###  

### (b)                                 TransferTaxes.  The Seller and Buyer shallbe equally responsible for and shall each pay one half of all sales, use, transfer,stamp duty, recording, value added, and other similar taxes and fees,including, without limitation, all bulk sales taxes, in each case includinginterest, penalties or additions attributable thereto (“**Transfer Taxes**”), arising out of or inconnection with the transactions contemplated by this Agreement.  The parties shall cooperate with each otherto the extent reasonably requested and legally permitted to minimize anyTransfer Taxes, including reasonable cooperation with respect to the place andmethod of transfer and delivery of the Assets.

###  

### (c)                                  Responsibilityfor Tax Returns and Taxes.

###  

#### (i)                                     Subjectto Section 5.15(c)(iii) below, Seller will be responsible for thepreparation and filing of all Tax Returns of Seller (including Tax Returnsrequired to be filed after the Closing Date) to the extent such Tax Returnsinclude or relate to the Seller’s operation of the Business or Seller’s use orownership of the Assets.  Seller’s TaxReturns to the extent they relate to the Business or Assets shall be true,complete and correct and prepared in accordance with applicable Law in allrespects.  Seller will be responsiblefor and make all payments of Taxes shown to be due on such Tax Returns to theextent they relate to the Assets or the Business.

####  

#### (ii)                                  Buyerwill be responsible for the preparation and filing of all Tax Returns it isrequired to file with respect to Buyer’s ownership or use of the Assets or itsoperation of the Business attributable to taxable periods (or portions thereof)commencing after the Closing Date. Buyer’s Tax Returns, to the extent they relate to the Assets or theBusiness, shall be true, complete and correct and prepared in accordance withapplicable Law in all respects.  Buyerwill make all payments of Taxes shown to be due on such Tax Returns to theextent they relate to the Assets or the Business.

####  

#### (iii)                               In the case of any realor personal property taxes (or other similar Taxes) attributable to the Assetsfor which Tax Returns cover a taxable period commencing before the Closing Dateand ending thereafter, Buyer shall, in consultation with Seller, prepare suchreturns and make all payments required with respect to any such Tax Return; provided*,*however, that Seller will promptly reimburse Buyer uponreceipt of a copy of the filed Tax Return to the extent any payment made byBuyer relates to that portion of the taxable period ending on or before theClosing Date, which amount shall be determined and prorated on a per diembasis.

####  

### (d)                                 Cooperation.  To the extent relevant to the Business orthe Assets, each party shall (i) provide the other with such assistance asmay reasonably be required in connection with the preparation of any Tax Returnand the conduct of any audit or other examination by any taxing authority or inconnection with judicial or administrative proceedings relating to anyliability for Taxes and (ii) retain and provide the other with all recordsor other information that may be relevant to the preparation of any TaxReturns, or the

###  

### 36

### 

###  

### conductof any audit or examination, or other proceeding relating to Taxes.  Seller shall retain all documents, includingprior years’ Tax Returns, supporting work schedules and other records orinformation with respect to all sales, use and employment Tax Returns and,absent the receipt by Seller of the relevant Tax clearance certificates, shallnot destroy or otherwise dispose of any such records for seven (7) years afterthe Closing Date without the prior written consent of Buyer.

###  

### (e)                                  EmployeeWithholding.  Buyer shall prepareand furnish to continuing employees of the Business who were employees of theBusiness prior to the Closing Date (“continuing employees”) Form W-2 whichshall reflect all wages and compensation paid to continuing employees for thatportion of the calendar year in which the Closing Date occurs during which thecontinuing employees were employed by the Seller Group and were employed inconnection with the operation of the Business. The Seller Group shall furnish to Buyer the Forms W-4 and W-5 ofeach continuing employee.  Buyer shallsend to the appropriate Social Security Administration office a duly completedForm W-3 and accompanying copies of the duly completed Forms W-2.  It is the intent of the parties hereunder thatthe obligations of Buyer and the Seller Group under this Section 5.15shall be carried out in accordance with Section 5 of Revenue Procedure96-60.

###  

## ***Section5.16***                            FurtherActions

## *** ***

### (a)                                  Fromand after the Closing Date, each party shall cooperate with the other party andtheir representatives, and shall execute and deliver such documents and takesuch other actions as the other party may reasonably request, for the purposeof evidencing the transactions contemplated by this Agreement.

###  

### (b)                                 Fromand after the Closing Date, Buyer shall cooperate with Seller and itsrepresentatives, and shall execute and deliver such documents and take suchother actions as Seller may reasonably request, for the purposes of evidencingthe transactions contemplated by this Agreement and having Buyer assume theAssumed Liabilities.

###  

## ***Section5.17***                            Compliancewith Bulk Sales Laws; Payment of Retained Liabilities

## *** ***

The parties hereby waive compliance with the bulksales act or comparable statutory provisions of each applicable jurisdiction inrespect of the transactions contemplated by this Agreement, provided, that Seller Group agrees toindemnify Buyer with respect to any noncompliance with such laws and Buyer’swaiver with respect thereto.

 

## ***Section5.18***                            StandardsOrganizations

## *** ***

Buyer and Seller acknowledge that Schedule 3.7(p)is incomplete and agree that Seller may update Schedule 3.7(p) prior tothe Closing.  The exclusion of any itemson Schedule 3.7(p) as of the date of this Agreement which are subsequentlyadded shall not be deemed a breach of the representation in Section 3.7(p).

 

## ***Section5.19***                            Compilers,etc.

## *** ***

Seller agrees to cooperate with Buyer in good faith tohelp identify prior to Closing any additional compilers, development tools,library functions and files and the like that should be listed on Schedule3.7(m) or that the Buyer may otherwise need after the Closing for operation ofthe Business.  The exclusion of anyitems on Schedule 3.7(m) as of the date of this Agreement which aresubsequently added shall not be deemed a breach of the representation inSection 3.7(m).

 

37

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## ***Section5.20***                            BuyerAcknowledgment

## *** ***

Buyer acknowledges that it will have to purchaselicenses for the third party software installed on the personal computersincluded in the Assets and other off-the-shelf third-party software used inconnection with the Business, unless the Buyer already has licenses in placethat cover such software.

 

## ***Section5.21***                            ConductRelating to Receivable and Payables

## *** ***

At all times after the date hereof, the Seller Groupshall collect any receivables and satisfy any payables relating to the Businessto which Seller Group is entitled or obligated in the ordinary course ofbusiness, consistent with past practice. In connection therewith, the Seller Group shall use commerciallyreasonable efforts to preserve relationship with those persons having businessdealings with the Business to the end that its goodwill and ongoingrelationship with the Business shall not be impaired as a result of SellerGroup’s actions.  Seller shall notifyBuyer of any problems or changes from historic practices that arise relating toSeller’s collections and payments efforts involving Key Suppliers andSignificant Customers.

 

## ***Section5.22***                            Non-U.S.Agreements

## *** ***

The Seller Group and Buyer and their respectiveaffiliates, as appropriate, may enter documentation as mutually agreed upon(any such agreement, a “**Non-U.S. Agreement**”)in order to effect the transfer of certain Assets.

 

## ***Section5.23***                            Agreements Related to Certain Warranty andService Obligations

 

If Seller shall have anywarranty or service obligation pursuant to an Excluded Warranty Obligation orpursuant to any Rejected Asset pursuant to Section 5.8 hereof, then (a) Buyershall perform such warranty or service obligation and (b) Seller and Buyershall agree upon reasonable compensation to Buyer for performing such warrantyor service obligation.

 

## ***Section5.24***                            Assistance Relating to Retained Agreements

## *** ***

Prior to the Closing, Seller agrees to use its commerciallyreasonable efforts to replicate and transfer to Buyer at the Closing suchportions of agreements set forth on Schedule 1.1(d) of the Disclosure Schedulesand other agreements to which a member of the Seller Group is a party (a) thatare used in the Business but not included in Schedule 1.1(a)(iii)(A) of theDisclosure Schedules and (b) that Buyer notifies Seller it desires to bereplicated (the “**Retained Agreements**”),on the same terms and conditions as are enjoyed by Seller or as close theretoas practicable; provided that Seller shall be under no obligation to pay anyfees to such third parties in order to have such contracts replicated.  After the Closing, Seller agrees tocooperate and use its commercially reasonable efforts to assist Buyer in obtaining,at Buyer’s cost, agreements from the third parties who are parties to theRetained Agreements to the extent not obtained prior to Closing and to theextent requested by Buyer. Notwithstanding the foregoing, Buyer and Selleragree that the Seller shall have no obligation to attempt to obtain replicationof any of the agreements listed on Schedule 1.1(d) under the header “RetainedPatent Licenses” or the cross-licenses or covenants not to sue listed onSchedule 3.7(f) of the Disclosure Schedules under the header “Cross-License andCovenant Not to Sue Agreements.”

 

## ***Section5.25***                            Agreements Related to Certain Liabilities

## *** ***

As to any of the Assumed Liabilities specifically setforth on the Reference Balance Sheet that relate to employee benefits, theparties will work cooperatively to provide for the assumption by Buyer of suchliabilities, and if any such Assumed Liabilities can not be formally assumed byBuyer and Seller is obligated

 

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to and makes payment to satisfy such Assumed Liabilities, Seller shallso advise Buyer, and Buyer shall reimburse Seller for any such payments made.

 

# **ARTICLE VI**

# ** **

# **CONDITIONSTO OBLIGATIONS OF THE PARTIES**

# ** **

## ***Section6.1***                                   Conditionsto Each Party’s Obligations

## *** ***

The respective obligation of each party to consummatethe transactions contemplated herein is subject to the satisfaction at or priorto the Closing of the following conditions precedent:

 

### (a)                                  Nostatute, rule or regulation shall have been enacted, entered, promulgated or enforcedby any court or governmental authority that prohibits or restricts in amaterial manner the consummation of the transactions contemplated hereby;

###  

### (b)                                 Thereshall not be in effect any judgment, order, injunction or decree of any courtof competent jurisdiction enjoining the consummation of the transactionscontemplated hereby; and

###  

### (c)                                  Anywaiting periods, including any extension thereof, applicable to thetransactions contemplated by this Agreement under the HSR Act and theapplicable antitrust or trade regulation Law of the other jurisdictions listedon Schedule 6.1(c) of the Disclosure Schedules (to the extent that Buyerdetermines in good faith that a filing in any such jurisdiction is necessary oradvisable), shall have expired or been terminated and all governmentalauthorizations or approvals required in connection with the transactionscontemplated by this Agreement, shall have been obtained or given.

###  

## ***Section6.2***                                   Conditionsto Obligations of Seller Group

## *** ***

The obligations of Seller Group to consummate thetransactions contemplated hereby are further subject to the satisfaction (orwaiver) at or prior to the Closing of the following conditions:

 

### (a)                                  Therepresentations and warranties of Buyer contained herein that are qualified asto materiality shall be true in all respects on and as of the Closing Date(except for the representations and warranties made as of a specific date whichshall be true in all material respects as of such date) with the same force andeffect as though made on and as of such date, and each of the representationsand warranties of Buyer that are not so qualified shall be true in all materialrespects;

###  

### (b)                                 Buyershall have performed and complied with in all material respects theiragreements, obligations and covenants under this Agreement required to beperformed or complied with by them at or prior to the Closing pursuant to theterms hereof;

###  

### (c)                                  Buyershall have delivered to Seller a certificate as to the satisfaction of theconditions set forth in Sections 6.2(a) and 6.2(b), dated as of theClosing and executed by an officer of each entity;

###  

### (d)                                 Buyershall have delivered to Seller those items set forth in Section 1.5; and

###  

### (e)                                  Eachof the documents referred to in Section 1.5 shall have been executed byBuyer and delivered to Seller.

###  

39

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## ***Section6.3***                                   Conditionsto Obligations of Buyer

## *** ***

The obligations of Buyer to consummate thetransactions contemplated hereby are further subject to the satisfaction (orwaiver) at or prior to the Closing of the following conditions:

 

### (a)                                  Therepresentations and warranties of Seller Group contained herein that arequalified as to materiality shall be true in all respects on and as of theClosing Date (except for the representations and warranties made as of aspecific date which shall be true in all material respects as of such date)with the same force and effect as though made on and as of such date, and eachof the representations and warranties of Seller that are not so qualified shallbe true in all material respects;

###  

### (b)                                 SellerGroup shall have performed and complied with in all material respects itsagreements, obligations and covenants under this Agreement required to beperformed or complied with by it at or prior to the Closing pursuant to theterms hereof;

###  

### (c)                                  Therequisite consents and approvals listed on Schedule 6.3(c) of theDisclosure Schedules shall have been obtained, and a copy of each such consentor approval shall have been provided to Buyer, at or prior to Closing;

###  

### (d)                                 Sellershall have delivered to Buyer a certificate as to the satisfaction of theconditions contained in Sections 6.3(a) and 6.3(b), dated as of theClosing and executed by an officer of Seller or such Selling Subsidiary, as thecase may be;

###  

### (e)                                  Eachof the documents referred to in Section 1.4 shall have been executed bythe appropriate member(s) of the Seller Group and delivered to Buyer;

###  

### (f)                                    Provisionsatisfactory to Buyer shall have been made for the release of any securityinterests which encumber any of the Assets other than Permitted Encumbrances;

###  

### (g)                                 Thereshall not be any suit, action, or other proceeding pending or overtlythreatened by any governmental authority or administrative agency or commissionthat seeks to enjoin or otherwise prevent consummation of the transactionscontemplated hereby or that would have a Material Adverse Effect, other thansuits, actions or proceedings that, in the reasonable opinion of Buyer’scounsel, are unlikely to prevail;

###  

### (h)                                 Seller Group shall have provided to Buyer allAudited and Other Required Financial Information of the Business required bythe SEC to be filed by Buyer following the Closing as part of the Form 8-K withrespect to the transactions contemplated by this Agreement; and

###  

### (i)                                     Noevent shall have occurred since the date of this Agreement and no condition orcircumstance shall exist that would reasonably be expected to give rise to anyMaterial Adverse Effect.

###  

# **ARTICLE VII**

# ** **

# **SURVIVALOF REPRESENTATIONS; INDEMNIFICATIONS**

# ** **

## ***Section7.1***                                   Survivalof Representations

## *** ***

All representations and warranties made in thisAgreement shall survive the Closing for a period of twelve (12) months, but,except as provided in Section 8.2, shall not survive any termination ofthis Agreement; provided, however, that notwithstanding theforegoing, (i) the representations and warranties

 

40

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contained in Sections 3.2 and 4.2 shall survive the Closingindefinitely (subject to any applicable statutes of limitations) and(ii) the representations and warranties contained in Sections 3.13and 3.15 shall survive until sixty (60) days after the expiration of theapplicable statute of limitations (as the same may be extended).  The applicable time periods specified in thepreceding provisions of this Section 7.1 are each referred to as an “**Indemnity Period**.”  This Section 7.1 shall not limit anycovenant or agreement of the parties that contemplates performance after theClosing.

 

## ***Section7.2***                                   SellerGroup’s Agreement to Indemnify

## *** ***

### (a)                                  Subjectto the terms and conditions set forth herein, from and after the Closing,Seller Group shall indemnify and hold harmless Buyer and its respectivedirectors, officers, employees, affiliates, controlling persons, agents andrepresentatives and their successors and assigns (collectively, “**BuyerIndemnitees**”) fromand against all liability, demands, claims actions or causes of action,assessments, losses, damages, costs and expenses (including, withoutlimitation, attorneys’ fees and expenses reasonably incurred) asserted againstor incurred by any Buyer Indemnitee as a result of or arising out of (i) abreach of any representation or warranty contained in Article III,(ii) Excluded Liabilities, or (iii) a breach of any agreement or covenantof Seller in this Agreement (collectively, “**BuyerDamages**”).  Notwithstandinganything to the contrary, if a representation or warranty is breached inaccordance with its terms (including any materiality standard containedtherein), Buyer Damages for such a breach shall be determined without givingeffect to any materiality standard contained therein.

###  

### (b)                                 SellerGroup’s obligations to indemnify Buyer Indemnitees pursuant toSection 7.2(a) hereof with respect to a breach of a representation orwarranty contained in this Agreement are subject to the following limitations:

###  

#### (i)                                     Theamount of any Buyer Damages shall be reduced by any amount actually received bya Buyer Indemnitee with respect thereto under any insurance coverage (otherthan self insurance) or from any other party alleged to be responsibletherefor.  Buyer Indemnitees shall usecommercially reasonable efforts to collect any amounts available under suchinsurance coverage and from such other party alleged to have responsibility.  If a Buyer Indemnitee receives an amountunder insurance coverage or from such other party with respect to Buyer Damagesat any time subsequent to any indemnification provided by Seller Group pursuantto this Section 7.2, then such Buyer Indemnitee shall promptly reimburseSeller, as the case may be, for any payment made or expense incurred by Sellerin connection with providing such indemnification up to such amount received byBuyer Indemnitee, but net of any expenses incurred by such Buyer Indemnitee incollecting such amount;

####  

#### (ii)                                  SellerGroup shall be obligated to indemnify Buyer Indemnitees only for those claimswith respect to a breach of a representation or warranty giving rise to BuyerDamages as to which Buyer Indemnitees have given Seller written notice thereofprior to the end of any applicable Indemnity Period; and

####  

#### (iii)                               In the absence of fraudor willful misconduct, and except with respect to Excluded Liabilities, SellerGroup shall not be obligated to indemnify Buyer Indemnitees with respect toclaims for indemnification pursuant to this Section 7.2 with respect to abreach of a representation or warranty until such claims exceed $1,000,000 inthe aggregate, at which point Seller Group shall indemnify Buyer Indemniteesfor all claims in excess of such amount. Notwithstanding the foregoing, in no event shall the obligation of theSeller to indemnify the Buyer Indemnitees hereunder with respect to a breach arepresentation or warranty exceed $16.0 million (the “**Seller Indemnity Cap**”) (less the amount ofany payments made pursuant to the Additional Agreement between Buyer and Sellerdated the date hereof (the “**AdditionalAgreement**”), other than in connection with (A) fraud or willfulmisconduct, (B) Excluded Liabilities, or (C) the breach of therepresentations and warranties contained in Sections 3.13 or 3.15, in eachcase for which Seller shall be

####  

#### 41

#### 

####  

#### obligatedto indemnify Buyer Indemnitees for the full extent of Buyer Damages. Paymentsmade by Seller Group in respect of Excluded Liabilities shall not be countedagainst the Seller Indemnity Cap.

####  

## ***Section7.3***                                   Buyer’sAgreement to Indemnify

## *** ***

### (a)                                  Subjectto the terms and conditions set forth herein, from and after the Closing, Buyershall indemnify and hold harmless Seller and its directors, officers,employees, affiliates, controlling persons, agents and representatives andtheir successors and assigns (collectively, the “**Seller Indemnitees**”) from and against all liability,demands, claims, actions or causes of action, assessments, losses, damages,costs and expenses (including, without limitation, attorneys’ fees and expensesreasonably incurred) (collectively, “**Seller Damages**”) asserted against or incurred by any Seller Indemnitee as aresult of or arising out of (i) the Assumed Liabilities, (ii) abreach of any representation or warranty contained in Article IV of thisAgreement or (iii) a breach of any agreement or covenant of Buyer in thisAgreement or otherwise.

###  

### (b)                                 Buyer’sobligations to indemnify Seller Indemnitees pursuant to clause (ii) ofSection 7.3(a) hereof with respect to a breach of a representation orwarranty contained in this Agreement are subject to the following limitations:

###  

#### (i)                                     Inthe absence of fraud or willful misconduct, no indemnification pursuant to thisSection 7.3 shall be made by Buyer with respect to any claim forindemnification with respect to a breach of a representation or warranty untilthe aggregate amount of Seller Damages under such claims exceeds an amountequal to $1,000,000 in the aggregate and, in such event, indemnification shallbe made by Buyer for all claims in excess of such amount, up to a maximum of$16.0 million;

####  

#### (ii)                                  Theamount of any Seller Damages shall be reduced by any amount actually receivedby a Seller Indemnitee with respect thereto under any insurance coverage (otherthan self insurance) or from any other party alleged to be responsibletherefor.  Seller Indemnitees shall usecommercially reasonable efforts to collect any amounts available under suchinsurance coverage and from such other party alleged to haveresponsibility.  If a Seller Indemniteereceives an amount under insurance coverage or from such other party withrespect to Seller Damages at any time subsequent to any indemnificationprovided by Buyer pursuant to this Section 7.3, then such SellerIndemnitee shall promptly reimburse Buyer for any payment made or expenseincurred by Buyer in connection with providing such indemnification up to suchamount received by the Seller Indemnitee, but net of any expenses incurred bysuch Seller Indemnitee in collecting such amount; and

####  

#### (iii)                               Buyer shall be obligatedto indemnify the Seller Indemnitees only for those claims with respect to abreach of a representation or warranty giving rise to Seller Damages and towhich the Seller Indemnitees have given Buyer written notice thereof prior tothe end of any applicable Indemnity Period.

####  

## ***Section7.4***                                   ThirdParty Indemnification

## *** ***

The obligations of any indemnifying party to indemnifyany indemnified party under this Article VII with respect to Buyer Damagesor Seller Damages, as the case may be, resulting from the assertion ofliability by third parties (a “**Claim**”), will be subject to the following terms and conditions:

 

### (a)                                  Anyparty against whom any Claim is asserted will give the party required toprovide indemnity hereunder written notice of, and copies of correspondence anddocumentation relating to, any such Claim promptly after learning of suchClaim, and the indemnifying party may at its option undertake the defensethereof by representatives of its own choosing.  Notwithstanding the foregoing, to the extent that any party seeksequitable relief against Buyer with respect to any Claim, Buyer shall have theoption to undertake

###  

### 42

### 

###  

### thedefense thereof by representatives of its own choosing and at its own expense,and the parties shall agree upon an arrangement to protect the rights of Buyer,with respect to the equitable relief claim, and Seller with respect to theremaining claims, provided that if after good faith negotiations the partiesare unable to reach such an arrangement, Buyer may elect to either (i) tenderthe defense of all claims by such third party to Seller, or (ii) assume thedefense of all claims by such third party, in which case Seller shall have nofurther obligation with respect to the Claim or indemnity therefore.  Failure to give prompt notice of, or copiesof correspondence and documentation relating to, a Claim hereunder shall notaffect the indemnifying party’s obligations under this Section 7.4, exceptto the extent that the indemnifying party is materially prejudiced by suchfailure to give prompt notice or copies of such correspondence anddocumentation.  If the indemnifyingparty, within thirty (30) days after notice of any such Claim, fails to assumethe defense of such Claim, the indemnified party against whom such claim hasbeen made will (upon further notice to the indemnifying party) have the rightto undertake the defense, compromise or settlement of such claim on behalf ofand for the account and risk, and at the expense, of the indemnifying party,subject to the right of the indemnifying party to assume the defense of suchClaim at any time prior to settlement, compromise or final determination thereof.

###  

### (b)                                 Notwithstandinganything in this Section 7.4 to the contrary, (i) the indemnifiedparty shall not settle a claim for which it is indemnified without the priorwritten consent of the indemnifying party, and (ii) the indemnifying partyshall not enter into any settlement or compromise of any action, suit orproceeding or consent to the entry of any judgment to be borne by theindemnifying party without the prior written consent of the indemnified party,which consent shall not be unreasonably withheld.

###  

## ***Section7.5***                                   SoleRemedy

## *** ***

After the Closing,(a) the indemnification provisions set forth in this Article VII,(b) the specific performance provisions of Section 9.13 and (c) theprovisions set forth in Sections 2.3(b), 2.3(f), 5.3(c), 5.4(b), 5.8, 5.17,9.1 and 9.8 are the sole and exclusive remedy of the Buyer Indemnitees and theSeller Indemnitees with respect to any of the matters described inSection 7.2(a) or Section 7.3(a).

 

# **ARTICLE VIII**

# ** **

# **TERMINATION,AMENDMENT AND WAIVER**

# ** **

## ***Section8.1***                                   Terminationof Agreement

## *** ***

This Agreement may be terminated and the transactionscontemplated hereby may be abandoned at any time prior to the Closing Date:

 

### (a)                                  bymutual written consent of Seller and Buyer;

###  

### (b)                                 byany party hereto if the Closing shall not have occurred on or before 120 daysafter date of this Agreement, July 2, 2003; provided, however,that the right to terminate this Agreement pursuant to this Section 8.1(b)shall not be available to (i) Seller Group, if any member of the SellerGroup has breached any of its representations, warranties or covenantshereunder in any material respect and such breach has been the cause orresulted in the failure of the Closing to occur on or before July 2, 2003or (ii) Buyer, if Buyer has breached any of its representations,warranties or covenants hereunder in any material respect and such breach hasbeen the cause of or resulted in the failure of the Closing to occur on orbefore July 2, 2003; and

###  

### (c)                                  bySeller or Buyer if any court of competent jurisdiction or other competentgovernmental authority shall have issued a statute, rule, regulation, order,decree or injunction or taken any other action

###  

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### permanentlyrestraining, enjoining or otherwise prohibit the transactions contemplated bythis Agreement and (i) such statute, rule, regulation, order, decree orinjunction or other action shall have become final and nonappealable or(ii) in the case of an injunction, either Seller or Buyer reasonablybelieves that the time required to resolve the suit and the related uncertaintyis reasonably likely to have a Material Adverse Effect, or (in the case oftermination by Buyer) a material adverse effect on the business of Buyer.

###  

## ***Section8.2***                                   Procedurefor and Effect of Termination

## *** ***

### (a)                                  Inthe event of termination of this Agreement and abandonment of the transactionscontemplated hereby by the parties hereto pursuant to Section 8.1 hereof,written notice thereof shall be given by a party so terminating to the otherparty and this Agreement shall forthwith terminate and be of no further effect,and the transactions contemplated hereby shall be abandoned without furtheraction by Seller Group or Buyer.

###  

### (b)                                 Inthe event of termination of this Agreement by Buyer or Seller Group as providedabove in Section 8.1(b), this Agreement shall forthwith become void and,subject to Section 8.4, there shall be no liability on the part of Buyer orSeller Group (or their respective officers or directors), except based uponobligations set forth in Section 9.1 hereof and in the immediatelypreceding sentence, and except that Buyer shall thereupon promptly return ordestroy (and cause its agents and representatives to return or destroy) toSeller all documents (and copies thereof) furnished to Buyer by Seller Groupand all excerpts therefrom and notes related thereto, and Buyer shall continueto adhere to the confidentiality obligations set forth in Section 5.2hereof.  Notwithstanding the foregoing,termination of this Agreement and abandonment of the transactions contemplatedhereby by the parties pursuant to Section 8.1(b) shall not in any waylimit or restrict the rights and remedies of any party hereto against any otherparty hereto that has violated or breached any of the representations, warranties,agreements or other provisions of this Agreement prior to termination hereof.

###  

## ***Section8.3***                                   Amendment,Extension and Waiver

## *** ***

At any time prior to the Closing Date, the partieshereto may (a) amend this Agreement, (b) extend the time for theperformance of any of the obligations or other acts of the parties hereto,(c) waive any inaccuracies in the representations and warranties containedherein or in any document delivered pursuant hereto and (d) waivecompliance with any of the agreements or conditions contained herein.  Except as provided in Section 5.8, thisAgreement may not be amended except by an instrument in writing signed onbehalf of all of the parties hereto. Any agreement on the part of a party hereto to any extension or waivershall be valid only if set forth in an instrument in writing signed on behalfof such party.

 

## ***Section8.4***                                   TerminationFee

## *** ***

In the event all conditions set forth in Sections 6.1and 6.3 of this Agreement have been satisfied prior to July 2, 2003 and Buyerdoes not or cannot consummate the transactions contemplated by this Agreementby July 2, 2003, then Buyer shall pay to Seller a one-time termination fee of$10,000,000. Buyer and Seller agree that the payment of such fee shall not be acap on the damages that Seller Group may have based upon Buyer’s failure toclose and Seller Group is not waiving any other rights or remedies they mayhave in connection therewith.

 

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# **ARTICLE IX**

# ** **

# **MISCELLANEOUS**

# ** **

## ***Section9.1***                                   Feesand Expenses

## *** ***

Whether or not the transactions contemplated hereinare consummated pursuant hereto, except as otherwise provided herein, each ofSeller and Buyer shall pay its own fees and expenses in connection with, or inanticipation of, this Agreement and the consummation of the transactionscontemplated hereby.  Notwithstandingthe foregoing, the parties shall share equally the filing fee required pursuantto the HSR Act and other comparable regulatory fees of other jurisdictions.  Each of Seller Group, on the one hand, andBuyer, on the other hand, shall indemnify and hold harmless the other partyfrom and against any and all claims or liabilities for financial advisory andfinders’ fees incurred by reason of any action taken by such party or otherwisearising out of the transactions contemplated by this Agreement by any personclaiming to have been engaged by such party.

 

## ***Section9.2***                                   FurtherAssurances; Guarantee

## *** ***

### (a)                                  Fromtime to time after the Closing Date, at the request of either party hereto andat the expense of the party so requesting, each of the parties hereto shallexecute and deliver to such requesting party such documents and take such otheraction as such requesting party may reasonably request in order to consummatemore effectively the transactions contemplated hereby.

###  

### (b)                                 Eachof Seller and Buyer hereby guarantees the timely performance by any subsidiaryof Seller and Buyer, respectively, of all obligations of Seller Group and Buyerhereunder, respectively, including without limitation, the execution andperformance of their respective obligations under this Agreement and theAncillary Agreements.

###  

## ***Section9.3***                                   Notices

## *** ***

All notices, requests, demands, waivers and othercommunications required or permitted to be given under this Agreement shall bein writing and may be given by any of the following methods: (a) personaldelivery; (b) facsimile transmission with telephone confirmation ofreceipt; (c) registered or certified mail, postage prepaid, return receiptrequested; or (d) overnight delivery service with receipt confirmed bysignature.  Notices shall be sent to theappropriate party at its address or facsimile number given below (or at suchother address or facsimile number for such party as shall be specified bynotice given hereunder):

 

### (a)                                  Ifto Buyer to:

###  

UTStarcom, Inc.

1275 HarborBay Parkway

Alameda,California 94502

Fax: (510)864-8802

Attention: General Counsel

 

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with a copy to:

 

WilsonSonsini Goodrich & Rosati, P.C.

650Page Mill Road

PaloAlto, California 94304-1050

FaxNo.: (650) 493-6811

Attention: Carmen Chang

 

### (b)                                 Ifto Seller Group to:

###  

3Com Corporation

5400 BayfrontPlaza

Santa Clara,California 95052

Fax: (408)326-5001

Attention: General Counsel

 

witha copy to:

 

Gray CaryWare & Freidenrich LLP

153 TownsendStreet, Suite 800

San Francisco,California 94107

Fax:  (415) 836-2501

Attention: Howard Clowes

 

All such notices, requests, demands, waivers andcommunications shall be deemed received (i) in the case of personaldelivery, upon actual receipt thereof by the addressee, (ii) in the caseof overnight delivery, on the day following delivery to the overnight deliveryservice, (iii) in the case of mail, upon receipt of the return receipt, or(iv) in the case of a facsimile transmission, upon transmission thereof bythe sender and issuance by the transmitting machine of a confirmation slip thatthe number of pages constituting the notice have been transmitted withouterror. In the case of notices sent by facsimile transmission, the sender shallcontemporaneously mail a copy of the notice to the addressee at the addressprovided for above.  However, suchmailing shall in no way alter the time at which the facsimile notice is deemedreceived.

 

## ***Section9.4***                                   Severability

## *** ***

Should any provision of this Agreement for any reasonbe declared invalid or unenforceable, such decision shall not affect thevalidity or enforceability of any of the other provisions of this Agreement,which remaining provisions shall remain in full force and effect and theapplication of such invalid or unenforceable provision to persons orcircumstances other than those as to which it is held invalid or unenforceableshall be valid and enforced to the fullest extent permitted by Law.

 

## ***Section9.5***                                   BindingEffect; Assignment

## *** ***

This Agreement and all of the provisions hereof shallbe binding upon and shall inure to the benefit of the parties hereto and theirrespective successors and permitted assigns. Prior to the Closing, neither this Agreement nor any of the rights, interestsor obligations hereunder shall be assigned, directly or indirectly, including,without limitation, by operation of Law, by any party hereto without the priorwritten consent of the other parties hereto.

 

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## ***Section9.6***                                   NoThird Party Beneficiaries

## *** ***

Except as provided in Section 9.5, this Agreementis solely for the benefit of Seller Group, and its successors and permittedassigns, with respect to the obligations of Buyer under this Agreement, and forthe benefit of Buyer, and their respective successors and permitted assigns,with respect to the obligations of Seller Group under this Agreement, and thisAgreement shall not be deemed to confer upon or give to any other third partyany remedy, claim liability, reimbursement, cause of action or other right.

 

## ***Section9.7***                                   Interpretation

## *** ***

### (a)                                  Thearticle and Section headings contained in this Agreement are solely for thepurpose of reference, are not part of the agreement of the parties and shallnot in any way affect the meaning or interpretation of this Agreement.

###  

### (b)                                 Asused in this Agreement, a “**governmental authority**” shall mean any governmental orregulatory authority, domestic or foreign.

###  

### (c)                                  Asused in this Agreement, the term “**person**” shall mean and include an individual, a partnership, a jointventure, a corporation, a trust, an unincorporated organization and agovernment or any department or agency thereof.

###  

### (d)                                 Asused in this Agreement, the term “**subsidiary**” shall mean with respect to the referenced entity, any otherentity (i) of which fifty (50) percent or more of either the equityinterests in, or the voting control of, such entity is, directly or indirectly,beneficially owned by the referenced entity, or (ii) of which the referencedentity has the ability to (A) elect fifty (50) percent or more of thedirectors or members of the governing board of such entity or (B) appointeither the general partner of a general partnership or limited partnership orthe managing member of a limited liability company.

###  

## ***Section9.8***                                   Jurisdictionand Consent to Service; Expenses Related to Legal Proceedings

## *** ***

Each of Seller and Buyer (a) agrees that anysuit, action or proceeding arising out of or relating to this Agreement shallbe brought solely in the state or federal courts of California;(b) consents to the exclusive jurisdiction of each such court in any suit,action or proceeding relating to or arising out of this Agreement, theAncillary Agreements or the Additional Agreement; (c) waives any objectionthat it may have to the laying of venue in any such suit, action or proceedingin any such court; (d) agrees that service of any court paper may be madein such manner as may be provided under applicable Law or court rules governingservice of process; and (e) agrees that the losing party in any suit, action orproceeding between the parties relating to or arising out of this Agreement,the Ancillary Agreements or the Additional Agreement shall indemnify and holdharmless the prevailing party for all costs incurred by such party inconnection with such suit, action or proceeding.

 

## ***Section9.9***                                   EntireAgreement

## *** ***

This Agreement, the Disclosure Schedules, theAncillary Agreements, the Additional Agreement, the Transition ServicesAgreement between Buyer and Seller dated the date hereof and the exhibits andother writings referred to herein or therein or delivered pursuant hereto orthereto that form a part hereof or thereof constitute the entire agreementamong the parties with respect to their subject matter and supersede all otherprior agreements and understandings, both written and oral, between the partiesor any of them with respect to their subject matter (including the memorandumof understanding).

 

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## ***Section9.10***                            DescriptiveHeadings

## *** ***

The descriptive headings herein are inserted forconvenience of reference only and shall in no way be construed to define,limit, describe, explain, modify, amplify, or add to the interpretation,construction or meaning of any provision of, or scope or intent of, thisAgreement nor in any way affect this Agreement.

 

## ***Section9.11***                            GoverningLaw

## *** ***

This Agreement will be governed by, and construed andenforced in accordance with, the laws of the State of California (regardless ofthe laws that might otherwise govern under applicable principles of conflictsof laws thereof) as to all matters, including but not limited to matters ofvalidity, construction, effect, performance and remedies.

 

## ***Section9.12***                            Counterparts

## *** ***

This Agreement may be executed simultaneously incounterparts, each of which will be deemed an original but all of whichtogether will constitute one and the same instrument.

 

## ***Section9.13***                            SpecificPerformance

## *** ***

The parties hereto agree that if any of the provisionsof this Agreement were not performed in accordance with their specific terms orwere otherwise breached, irreparable damage would occur, no adequate remedy atlaw would exist and damages would be difficult to determine, and that theparties shall be entitled to specific performance of the terms hereof andimmediate injunctive relief, without the necessity of proving the inadequacy ofmoney damages as a remedy and without the necessity of posting any bond orother security, in addition to any other remedy at law or equity.

 

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IN WITNESS WHEREOF, the parties hereto have causedthis Agreement to be executed as of the date first above written.

 
|   | BUYER:           |                                         |
|--------|------------------|----------------------------------------------|
|   |             |                                         |
|   | UTSTARCOM, INC.  |                                         |
|   |             |                                         |
|   |             |                                         |
|   | By:              | /s/  Hong Liang Lu                      |   |   |
|   |             | Name:  Hong Liang Lu                    |   |
|   |             | Title:    President/CEO       |   |
|   |             |                                         |
|   | SELLER:          |                                         |
|   |             |                                         |
|   | 3COM CORPORATION |                                         |
|   |             |                                         |
|   |             |                                         |
|   | By:              | /s/  Bruce L. Claflin                   |   |   |
|   |             | Name:  Bruce L. Claflin                 |
|   |             | Title:    President & CEO |
|        |                  |                                              |  |  |  |

 

49

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**Glossary**

 

“**1445 Certificates**” shallhave the meaning set forth in Section 1.4(f).

 

 “**Additional Agreement**” shall have the meaning set forth inSection 7.2(b)(iii).

 

“**AffectedEmployees**” shall have the meaning set forth in Section 2.3(a).

 

“**Affiliate**”shall have the meaning set forth in Section 3.14(a)(i) for purposes ofSection 3.14.

 

“**Agreement**”shall have the meaning set forth in the opening paragraph hereto.

 

“**Allocation**”shall have the meaning set forth in Section 5.15(a).

 

“**AncillaryAgreements**” shall have the meaning set forth in Section 1.4(n).

 

“**Assets**”shall have the meaning set forth in Section 1.1(a).

 

“**Assignmentof Leases**” shall have the meaning set forth in Section 1.1(b).

 

“**AssumedLiabilities**” shall have the meaning set forth inSection 1.1(c).

 

“**Billof Sale**” shall have the meaning set forth in Section 1.1(b).

 

“**Booksand Records**” shall have the meaning set forth inSection 1.1(a)(iii).

 

“**Business**”shall have the meaning set forth in the first recital of this Agreement.

 

“**BusinessEmployees**” shall have the meaning set forth in Section 3.14(b).

 

“**Business Facility**” shallhave the meaning set forth in Section 3.15(a)(i).

 

“**Business Real Property**”shall have the meaning set forth in Section 1.1(a)(i)(B).

 

“**Buyer**”shall have the meaning set forth in the first paragraph of this Agreement.

 

“**Buyer401(k) Plan**” shall have the meaning set forth inSection 2.3(a).

 

“**Buyer Audit Expense**”shall have the meaning set forth in Section 5.4(b).

 

“**BuyerDamages**” shall have the meaning set forth in Section 7.2(a).

 

“**BuyerIndemnitees**” shall have the meaning set forth inSection 7.2(a).

 

“**Cases**”shall have the meaning set forth in Section 3.10(a).

 

“**Claim**”shall have the meaning set forth in Section 7.4.

 

“**Closing**”shall have the meaning set forth in Section 1.3.

 

----

 

“**ClosingCash Purchase Price**” shall have the meaning set forth inSection 1.2.

 

“**ClosingDate**” shall have the meaning set forth in Section 1.3.

 

“**COBRA**”shall have the meaning set forth in Section 2.3(b)).

 

“**Code**”shall have the meaning set forth in Section 1.4(f).

 

“**ConfidentialInformation**” shall have the meaning set forth in Section 5.12.

 

“**ConfidentialityAgreement**” shall have the meaning set forth in Section 5.2(c).

 

“**Consulting Services Agreement**”shall have the meaning set forth in Section 1.4(j).

 

“**Contracts**”shall have the meaning set forth in Section 1.1(a)(iii)(A).

 

“**Copyrights**”shall have the meaning set forth in Section 3.7(n)(i).

 

“**DisclosureSchedules**” shall have the meaning set forth in the first paragraphof Article III.

 

“**Disposal Site**” shall havethe meaning set forth in Section 3.15(a)(ii).

 

“**Distribution Agreement**”shall have the meaning set forth in Section 3.12(f).

 

“**Eligible Employees**” shallhave the meaning set forth in Section 2.3(a).

 

“**Employee**”shall have the meaning set forth in Section 3.14(a)(iv).

 

“**EmployeeAgreement**” shall have the meaning set forth inSection 3.14(a)(v).

 

“**Employment Liabilities**”shall have the meaning set forth in Section 1.1(c).

 

“**EnvironmentalLaws**” shall have the meaning set forth in Section 3.15(a)(iii).

 

“**Environmental Permit**”shall have the meaning set forth in Section 3.15(a)(iv).

 

“**Equipment**”shall have the meaning set forth in Section 3.20(c).

 

“**ERISA**”shall have the meaning set forth in Section 2.3(a).

 

“**ExcludedLiabilities**” shall have the meaning set forth inSection 1.1(c).

 

“**Final Statement**” shallhave the meaning set forth in Section 1.7(a).

 

“**FinancialStatements**” shall have the meaning set forth in Section 3.4.

 

“**FMLA**”shall have the meaning set forth in Section 3.14(a)(vii).

 

“**Form 8-K**” shall havethe meaning set forth in Section 5.4(b).

 

“**GAAP**”shall have the meaning set forth in Section 3.4.

 

2

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“**Governmentalauthority**” shall have the meaning set forth in Section 9.7(b).

 

“**HazardousSubstance**” shall have the meaning set forth inSection 3.15(a)(v).

 

“**Hazardous Substance Activity**”shall have the meaning set forth in Section 3.15(a)(vi).

 

 “**HSR Act**” shall have the meaning set forth inSection 3.3(a).

 

“**IndemnityPeriod**” shall have the meaning set forth in Section 7.1.

 

“**Independent Accounting Firm**”shall have the meaning set forth in Section 1.7(b)(iii).

 

“**Instrumentof Assumption**” shall have the meaning set forth inSection 1.1(c).

 

“**IntellectualProperty**” shall have the meaning set forth inSection 3.7(n)(i).

 

“**IntellectualProperty Assignment**” shall have the meaning set forth inSection 1.1(b).

 

“**IntellectualProperty Contract**” shall have the meaning set forth inSection 3.7(n)(ii).

 

“**Intellectual Property LicenseAgreement**” shall have the meaning set forth in Section 1.4(k).

 

“**InternationalEmployee Plan**” shall have the meaning set forth inSection 3.14(a)(viii).

 

“**IRS**”shall have the meaning set forth in Section 3.14(a)(ix).

 

“**KeySuppliers**” shall have the meaning set forth in Section 3.18.

 

“**Knowledgeof Seller**” shall mean the actual knowledge of the persons listed inSchedule I of the Disclosure Schedules.

 

“**Law**” shall have themeaning set forth in Section 1.1(c).

 

“**LeasedReal Property**” shall have the meaning set forth inSection 3.8(b).

 

“**Leases**”shall have the meaning set forth in Section 3.8(b).

 

“**Lease Assignment Agreements**”shall have the meaning set forth in Section 1.4(l).

 

“**LicensedIntellectual Property**” shall have the meaning set forth inSection 3.7(n)(iii).

 

“**Licenses**”shall have the meaning set forth in Section 3.11(b)(i).

 

“**Liens**”shall have the meaning set forth in Section 3.8(a).

 

“**M&A Qualified Beneficiaries**”shall have the meaning set forth in Section 2.3(b).

 

“**Maskworks**”shall have the meaning set forth in Section 3.7(n)(i).

 

“**MaterialAdverse Effect**” shall have the meaning set forth inSection 3.6(c).

 

3

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“**Multiple Site License Agreement**”shall have the meaning set forth in Section 1.4(h).

 

“**Non-U.S. Agreements**”shall have the meaning set forth in Section 5.22.

 

“**Opening Statement**” shallhave the meaning set forth in Section 1.7(a).

 

“**OtherInstruments**” shall have the meaning set forth inSection 1.1(b).

 

“**Patents**”shall have the meaning set forth in Section 3.7(n)(i).

 

“**Pension Plan**” shall havethe meaning set forth in Section 3.14(a)(x).

 

“**Permits**”shall have the meaning set forth in Section 1.1(a)(i)(G).

 

“**PermittedEncumbrances**” shall have the meaning set forth inSection 3.8(a).

 

“**Person**”shall have the meaning set forth in Section 9.7(c).

 

“**Product**” shall have themeaning set forth in Section 3.7(n)(iv).

 

“**QualifiedBeneficiary**” shall have the meaning set forth inSection 3.14(a)(xi).

 

“**Real Estate Agreements**”shall mean the Rolling Meadows Lease Agreement, the Multiple Site LicenseAgreement and the Lease Assignment Agreements.

 

“**RealProperty Laws**” shall have the meaning set forth inSection 3.8(c).

 

“**ReferenceBalance Sheet**” shall have the meaning set forth inSection 1.1(a)(ii)(A).

 

“**RegisteredIntellectual Property**” shall have the meaning set forth in Section 3.7(n)(v).

 

“**Resolution Period**” shallhave the meaning set forth in Section 1.7(b)(iii).

 

 “**Required Documents**” shall have the meaning set forth inSection 3.2(b).

 

“**Required Financial Information**”shall have the meaning set forth in Section 5.4(b).

 

“**Rolling Meadows Lease Agreement**”shall have the meaning set forth in Section 1.4(g).

 

“**Seller**”shall have the meaning set forth in the first paragraph of this Agreement.

 

“**SellerConflicting Agreements**” shall have the meaning set forth inSection 3.3(b).

 

“**SellerDamages**” shall have the meaning set forth in Section 7.3(a).

 

“**SellerEmployee Plan**” shall have the meaning set forth inSection 3.14(a)(xii).

 

“**SellerGroup**” shall have the meaning set forth in the first recital of thisAgreement.

 

“**SellerIndemnitees**” shall have the meaning set forth inSection 7.3(a).

 

4

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“**Seller Indemnity Cap**”shall have the meaning set forth in Section 7.2(b)(iii).

 

“**SellerSavings Plan**” shall have the meaning set forth in Section 2.3(a).

 

“**SellerSurvival Date**” shall have the meaning set forth inSection 5.13.

 

“**Selling Group**” shall havethe meaning set forth in Section 2.3(b).

 

“**Significant Customers**”shall have the meaning set forth in Section 3.19.

 

“**Subsidiary**”shall have the meaning set forth in Section 9.7(d).

 

“**TaxReturn**” shall have the meaning set forth in Section 3.13(l).

 

“**Tax**”or collectively “**Taxes**” shall have the meaning set forth inSection 3.13(k).

 

“**ThirdParty Intellectual Property**” shall have the meaning set forth inSection 3.7(n)(vi).

 

“**TradeSecrets**” shall have the meaning set forth in Section 3.7(n)(i).

 

“**Trademarks**”shall have the meaning set forth in Section 3.7(n)(i).

 

“**TransferTaxes**” shall have the meaning set forth in Section 5.15(b).

 

“**TransferredIntellectual Property**” shall have the meaning set forth inSection 3.7(n)(vii).

 

 “**Working Capital of the Business**” shall have the meaning setforth in Section 1.7(c).

 

5

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